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I will be recieving the second and final severance chaeck…

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I will be recieving...

I will be recieving the second and final severance chaeck the first of the year from a previous employer. The issue is Both current job and this severance will be withholding social security tax. I would klike to change w4 to withold less taxes to help make up for the double social security witholdings

Submitted: 2 months ago.Category: Finance
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Answered in 3 minutes by:
12/20/2017
Financial Professional: Lev, Tax Preparer replied 2 months ago
Lev
Lev, Tax Preparer
Category: Finance
Satisfied Customers: 31,276
Experience: Personal Investment, Tax Preparation
Verified

The issue is that the severance payment is classified as supplemental wages - and most employers do not use W4 information for withholding from supplemental wages...

While you may want to communicate with your payroll department - generally federal income tax withholding from supplemental wages is based on 25% rate.

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Customer reply replied 2 months ago
After discussing with the former employer they said to adjust my w4
Financial Professional: Lev, Tax Preparer replied 2 months ago

It is possible that your employer is using W4 withholding instead of flat percentage.
Let me know your gross amount - and I will verify expected withholding.

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Customer reply replied 2 months ago
97,000
Financial Professional: Lev, Tax Preparer replied 2 months ago

Assuming your employer normally pays bi-weekly

and assuming you prepare W4 form as Single with TWO allowances

Your expected paycheck should look as

  • Federal Withholding $36,554
  • Social Security $6,014
  • Medicare $1,406.5
  • Net Pay $53,026

If you prepare W4 form as Married with TWO allowances - that will result

  • Federal Withholding $36,050
  • Social Security $6,014
  • Medicare $1,406.5
  • Net Pay $53,530
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Customer reply replied 2 months ago
I understand that I will submit a new w4 with 9 allowances. Is there any other way to avoid double paying social security tax. It happened this year (2017)
Financial Professional: Lev, Tax Preparer replied 2 months ago

I am not sure why you think that social security tax is paid twice...
If payment will come before Dec 31 - ALL your wages will be considered for social security tax.
The limit for wages subject to social security tax in 2017 is $127,200

As soon as your total wages overpass that limit - there will NOT be social security taxes withheld.

If you will prepare W4 form as Married with NINE allowances - that will result

  • Federal Withholding $35,618
  • Social Security $6,014
  • Medicare $1,406.5
  • Net Pay $53,961

So far - in your situation - if you want to reduce withholding - 25% flat withholding rate will result less withholding.

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Customer reply replied 2 months ago
Well that did niot answer my question. Thanks I'd like a refund please
Financial Professional: Lev, Tax Preparer replied 2 months ago

If you need any clarification - be sure to ask.

But otherwise - be aware that experts do not have access to your account - and for all payment option - please communicate with the customer service.

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