First paycheck of 2012 $50 less anyone know why?

[ShelsGoingToDisney]

Dh got paid today for the first time in 2012. His check was nearly $50 less than it has been the last year. He gets paid twice a month so that will be $100 less per month! He has not changed his withholdings or had anything additional added to be deducted that we know of. He is going to talk to the boss tomorrow (no HR, it is a small design firm) to see what the deal is.

I am just wondering if there was some tax thing that I missed in the news that will reduce paychecks for 2012. Anyone know anything?

 

[sunshine1178]

Dh got paid today for the first time in 2012. His check was nearly $50 less than it has been the last year. He gets paid twice a month so that will be $100 less per month! He has not changed his withholdings or had anything additional added to be deducted that we know of. He is going to talk to the boss tomorrow (no HR, it is a small design firm) to see what the deal is.

I am just wondering if there was some tax thing that I missed in the news that will reduce paychecks for 2012. Anyone know anything?

Hmm... My checks will be less in 2012 because
* I increased my 401(k) by 1% (voluntarily, but some companies have opt-out plans, not opt-in)
* My health insurance premium went up 5%
* The town I work in is implementing an income tax on employees, including non-residents

My guess, though, is that your husband's company set their 2012 payroll anticipating the expiration of the federal tax credit, but Congress extended it temporarily late last year. Last minute changes are heck on accounting software!

 

[meggybear17]

It could possibly be a local tax for wherever his company is located. My old company had a local EMT/Fire/police type tax that anyone working or living in the township had to pay. It was $52 and used to come out the first pay every January until too many people complained and they then my firm started taking $2 a paycheck instead all year.

 

[Claire&TheBoys]

The only thing I can think of is that the Making Work Pay credit expired a couple of years ago and if your husband's employer didn't update their withholding tables for 2011, they may have under-withheld for 2011. That was the $800 credit ($400 if claiming single) that was supposed to put more money in workers' paychecks in 2009 and 2010.

You should be able to look at the last stub from 2011 and the first one for 2012 and see where the difference is. There was some confusion as to whether the Social Security rate was going to stay at 4.2% or revert back to 6.2%, so if the check was calculated before the deal was made, it may have calculated your husband's portion at the wrong percentage. If Social Security and Medicare are lumped together as a single deduction on his paystub, it should be 5.65% of the taxable income (4.2% Social Security + 1.45% Medicare).

Could it be an increase in the cost of insurance?

Hope this helps!

 

[ShelsGoingToDisney]

Thanks for the ideas everyone! I know it is not an insurance increase or anything like that. I am thinking it must be some type of SS/Medicare/tax issue. Dh only gets emailed a PDF of a pay stub now and never remembers to print it or email it home so I can't look at it to compare.

I guess we'll find out tomorrow after he talks to the boss. I am hoping it is a one time thing and not a $100 less per month! I need that money for WDW!

 

[QVCshopper]

It could possibly be a local tax for wherever his company is located. My old company had a local EMT/Fire/police type tax that anyone working or living in the township had to pay. It was $52 and used to come out the first pay every January until too many people complained and they then my firm started taking $2 a paycheck instead all year.

I also think this is what the $50 is. Every employee in certain townships must pay it; can ask for it back if you make less than a certain amount (like $12K). We also were $52 straight, but it has gone to $2/pay check. Are you in a township state? PA is one...

 

[ShelsGoingToDisney]

I also think this is what the $50 is. Every employee in certain townships must pay it; can ask for it back if you make less than a certain amount (like $12K). We also were $52 straight, but it has gone to $2/pay check. Are you in a township state? PA is one...

No township. The only thing I can think of is Omaha started levying a wheel tax on people a few years ago but that is paid when you register your vehicle, at least that is all I can find on a google search. Also we live in a different county so we've never had to pay that. I would think it would be in the news if they started taking this from your paycheck instead of paying when you register you car?

 

[DawnM]

Social Security increase.

http://biztaxlaw.about.com/od/emplo...Act-Reduces-Employee-Withholding-For-2011.htm

 

[IDoDis]

Social Security increase.

http://biztaxlaw.about.com/od/emplo...Act-Reduces-Employee-Withholding-For-2011.htm

That decrease in withholding has been extended for at least 2 more months before congress votes again.

 

[ShelsGoingToDisney]

Social Security increase.

http://biztaxlaw.about.com/od/emplo...Act-Reduces-Employee-Withholding-For-2011.htm

But isn't that what all the last minute haggling was about in Congress right before Christmas? I thought it got extended?

http://www.businessweek.com/news/20...-two-month-u-s-payroll-tax-cut-extension.html

If it is indeed SS increases then why didn't everyone else here get lower paychecks? Assuming you have received a new paycheck in 2012.

 

[DawnM]

Oh, it may have been. I haven't kept up. I was just expecting the paycheck to go down in January, but Dh's paycheck came for Jan 1 on Dec. 29 due to the holiday, so he hasn't received a 2012 check yet.

 

[SplashMo]

The income limit for Social Security tax is $106,800; this means that if you have a higher income than $106,800 you will only be taxed on the $106,800.

This gives you a higher pay check at the end of the year than the beginning...

 

[sam_gordon]

The income limit for Social Security tax is $106,800; this means that if you have a higher income than $106,800 you will only be taxed on the $106,800.

This gives you a higher pay check at the end of the year than the beginning...

Only if you make that much.

 

[Donnainnj]

How about unemployment and disability? At the beginning of the year you pay it until you hit a certain maximum.
Donna

 

[Kies99]

Starting this month here in PA it is now mandatory for employers to withhold local taxes. In the past it was optional and if it wasn't withheld the employee had to figure out their taxes and generally pay on a quaterly basis.

Could be something like that, but I lean more towards a annual "Services" tax. We get hit with this every January if you work in downtown Pittsburgh.

 

[MineMail]

How about unemployment and disability? At the beginning of the year you pay it until you hit a certain maximum.
Donna

That's my guess as well. I remember my paycheck net going up a little in the latter part of 2011. It could also be a Flexible Spending Account or Retirement Contribution deduction. My FSA was fully paid by a certain date, so my check went up after that point. Contribution changes usually take effect on the 1st of the new year.

The check stub should list the deductions - compare Jan 2011, Dec 2011 and Jan 2012 - that should reveal which deduction went up this month.

 

[Allison]

But isn't that what all the last minute haggling was about in Congress right before Christmas? I thought it got extended?

http://www.businessweek.com/news/20...-two-month-u-s-payroll-tax-cut-extension.html

If it is indeed SS increases then why didn't everyone else here get lower paychecks? Assuming you have received a new paycheck in 2012.

Your husband's check could have been processed before the agreement was reached.

Companies who had payrolls very early in the year had to make a decision about how to handle the social security tax rate if they were processing before there was a decision by Congress.

 

[Green Tea]

Did he elect more to go into Flex Benefits?

 

[Mickeyluver37]

I agree with those that are saying it’s the FICA (Social Security.) Because it was only temporarily extended for two months at the very last minute, and also prorated, companies are actually being given the option to still withhold that 2%, and pay back the employee when an agreement is reached. My company decided NOT to do this, as it would be a nightmare for them to refund that 2% to employees that leave the company. The software has to be programmed differently than in 2011 because of the pro-rating, so last week’s payroll had to be manually overridden. Not all companies chose to handle it that way.

You should be able to look at his paystub and see if they took out 6.2% or 4.2%.

I am thrilled that the 2% was extended for the 2 months, and hopefully will be for the whole year, but obviously it’s going to eventually go back to 6.2% someday!

 

[Mickeyluver37]

The income limit for Social Security tax is $106,800; this means that if you have a higher income than $106,800 you will only be taxed on the $106,800.

This gives you a higher pay check at the end of the year than the beginning...

It's $110,100 for 2012.