Did you ever find out why we are being taxed both for the Hypo Tax and FIT Witholding? I read up alot on this last night and it seems as if it is double-dipping. The salary worksheet shows the Hypo Tax reducing the C&S allowance by $X, and then further down we are again being charged a federal income tax. Did you ever ask payroll about this?
You pay taxes on the uplift, too? I thought that was tax protected.
And you still get to claim standard deductions, as well as other pre-tax deductions (ie 401k), yes?
I thought hypo tax *was* an estimated FIT withholding figure. My offer details hypo tax, but there's no mention of an additional FIT withholding. So I'm confused why new employees are seeing double withholdings.
Well, traditionally speaking, U.S. taxes are a little more complicated. My marginal tax rate today is 28%, meaning that's the rate on my last dollar earned. But my first dollar earned (well, all single status earners) is 10%... up to $8,925. $8,925 to $36,250 it is 15%. $36,250 to $87,850 is 25%.
We don't pay the top tax rate on all our dollars earned. The rate is different based on how much we've earned. That's what we actually pay "effective tax rate". Just a point of clarification.
But my real question is why would our pay have both hypothetical tax AND federal income tax? I thought hypo was a projected "effective tax rate" deduction.
Are all on U.S. payroll having hypo tax withholding and FIT withholding?
I received my written offer and yes, it includes hypothetical tax and Federal Income Tax Withholding. The former being much more than the latter. I did ask for clarification but I haven't received it yet.
I'm hoping to get a real answer before my modified offer is received.