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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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If someone receives a paycheck, (retro pay) for $28, 515.00,

Customer Question

If someone receives a paycheck, (retro pay) for $28, 515.00, and claim o exemptions with no dependents, Was the government suppose to take out $13, 774 in taxes?
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.
Hello ladyc,

Normally when someone receives a one time lump sum payment such as a bonus, or in your case a large check for retroactive pay, a flat rate of 25% is used for federal tax purposes. In addition, you have FICA taxes to pay which amount to 7.65% of the gross amount. State taxes may also apply depending on if you live in a state that has income tax.

It sounds as though perhaps your employer did not apply the special 25% rate to this payment. If this check was processed as a regular weekly or even bi-weekly payroll check, then the payroll program "assumes" that is the amount you make every week. In such a case, that would put you in the very highest federal bracket of 35%, and it sounds as though this is what may have happened here. If they withheld 35% for federal tax and then another 7.65% for FICA taxes, that alone would have been $12,161.00. If you had state taxes in addition to that, then this could easily account for the $13,774 withheld.

It does not, however, mean that you will actually have this much in tax liability. Once you actually file your taxes for the year, any amount which was overpaid will be refunded to you. All the more reason to file your taxes as soon as you can, as you may have a sizeable refund coming your way.

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Thank you.