Paycheck Deduction For Employer Taxes?
Q. I received a bonus check and the amount that was on the paystub was $500 less than what the bonus came out to. When asking the owner he stated that money was used to pay for the employer’s share of the taxes. On top of that, they took out taxes for my portion as well. On the paystub, it does not show the taxes that were taken out. Did I get cheated?
A. The short answer is…Yes! If your employer took the employer’s taxes out of your check, he has improperly removed money from your check. The total rate for Social Security is 12.4% of taxable wages up to $102,000 for 2008. Of this, your employer will pay half (6.2%) and you will pay half through payroll deductions. The employer is supposed to remit the entire 12.4% on a schedule set in Publication 15. Medicare works in the same manner, except that the total rate is 2.9% with the employer and you both contributing 1.45%. There is no limit. Your employer is required to withhold the appropriate amounts from your check for employee withholding. They are required to pay the remainder. Other taxes that your employer pays based on your paycheck are Federal and State Unemployment. These amounts too should never show as a payroll deduction.
What may have happened is that the owner did not prepare the checks and was unaware of the actual deductions involved. One method of withholding on bonuses is to use the flat percent method, which takes 25% for federal income tax withholding. Because this number is usually much higher than regular withholding rates, it seems to the employee like they are being “ripped off.”
To summarize, you have two options:
1) if your employer truly withheld his taxes from your check, contact the revenue department of your state immediately. This is simply not correct.
2) when you talk to the actual preparer of paychecks, you may find that the owner did not understand what actually happened and you simply experienced higher bonus withholding.
