How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Lev Your Own Question

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22644
Experience:  Taxes, Immigration, Labor Relations
Type Your Tax Question Here...
Lev is online now
A new question is answered every 9 seconds

My employer was incorrectly paying me (salary not hourly) since

Resolved Question:

My employer was incorrectly paying me (salary not hourly) since 2006. Now that they want to make it right, they have offered $20,000 that would be taxed at 36%=$13,000 or $15,000 that would have the necessary taxes taken out to equal $15k even. They stated that it would not be catorgorized as income but rather a settlement. I don't know which one I should choose so I don't get taxed twice. Please advise. Thank you.
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

Settlement that you will receive still considered your income....

The question is if it would be taxable?

 

The IRS provides - see publication 525- http://www.irs.gov/pub/irs-pdf/p525.pdf

Back pay awards. Include in income amounts you are awarded in a settlement or judgment for back pay. These include payments made to you for damages, unpaid life insurance premiums, and unpaid health insurance premiums. They should be reported to you by your employer on Form W-2.

 

As this is your supplemental wages - your employer will likely withheld federal income tax at 25% tax rate.

Your actual tax would depend on your total income, filing status, deductions, etc.

The maximum federal tax rate is 35% for taxable income above $357,700 (if you are single)

Customer: replied 5 years ago.

annual income- $50,100

filing status- single, 1 (getting married in two weeks- can always switch from 1 to 0)

which filing status benfits this situation?

state- Nevada

so what option is best for me?

you stated 25% and I stated they were taking taxes at 36% on option #1

is there a % that is required or is it open tofor them to pick a number?

Expert:  Lev replied 5 years ago.

As you are getting married and will be married on the last day of the year - for tax purposes you will be considered married for the whole year and if you plan to file joint tax return - we need to know estimated income of your-to-be-a-spouse.

 

If you file as married filing separate - your estimated taxable income will be

$50,100 - $5450(assuming you use standard deduction) - $3500(personal exemption) = $41150.

You will be in 25% tax bracket - for taxable income between $32,550 and $78,850

 

With additional income of $20,000 - you still will stay in the same tax bracket - and eventually you will pay 25% or $5000 in federal income tax.

This income will likely be considered as wages and social security and Medicare taxes will be due - total 7.65%.

 

As this is not your regular - but supplemental wages - employers normally are required to withhold 25% regardless of your tax bracket and W-4 form filing.

If your situation - it looks as that is exact rate you would pay federal income tax on that amount.

I am not sure why your employer is taking 36%. But is they do and you would overpay taxes - you will eventually get a large refund at the tax time.

 

The State of Nevada does not have a state income tax - so there is nothing for you to worry from that side.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22644
Experience: Taxes, Immigration, Labor Relations
Lev and other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.