Hey! Where’d My
It’s Friday, and your boss hands you your
paycheck for your first week of work. You rip
it open with excitement only to find that it’s
a lot less than the $280 you were expecting
Don’t worry; your boss didn’t make
a mistake. Your check is smaller because of
taxes. That’s right, if you’re making
$7 an hour and working 40 hours a week, the
paycheck you receive from your employer will
be significantly smaller than $280.
Your employer keeps part of your money and gives
it to the federal and, in some states, local
governments. This way, you don’t have
to worry as much at the end of the year about
saving money to pay your tax bill, and the government
doesn’t get all its money at one time,
but instead gets a steady stream of money throughout
This pay-as-you-earn system of taxation means
that before you get any of the money you’ve
been working for, some of it is taken out and
deposited into an Internal Revenue Service account
or a state account. At the end of the year when
it comes time to file your taxes, that money
is credited to you and sometimes even returned
if the state and federal governments determine
you didn’t make enough money to be taxed.
If you are working at a job where you receive
tips, even those must be reported to your employer
so that taxes can be withheld from them. Be
sure to talk to your boss so that you know when
and how to report your tips.
In addition to income taxes, your employer will
also probably be withholding money from your
paycheck for Social Security and Medicare. You
are required to pay into these programs now,
but you will be eligible to collect money from
them when you are older. Generally employers
withhold 7.7 percent of your pay for these programs
and your employer contributes an equal amount
of money for you as well, doubling the amount
you’re paying into the system.
The amount of money that’s taken out of
your check may be shocking, but don’t
despair; you do have some control over how much
money your boss withholds for taxes. You can
talk to the people in the payroll department
of your workplace and ask them about adjusting
the amount of income tax withheld from each
paycheck. On your first day of work, you filled
out a W-4 form and the answers you provided
to those questions helped your boss figure out
how much money to take out of your checks for
taxes. If you honestly feel that too much money
has been withheld from your check, it’s
possible that the form needs some adjustments.
Even if your employer is taking out the correct
amount of money from your paycheck and it seems
like a lot, there is a light at the end of the
taxation tunnel. Come April, you will need to
file a tax return and if the government took
too much of your money based on the amount you
earned in the previous year, you’ll get
a check in the mail from Uncle Sam.
Don’t let taxes catch you by surprise.
When you’re planning how many hours to
work in order to make your car payment or buy
that new stereo, remember that part of your
money goes directly to the government. Find
out how much money your employer is withholding
from each of your paychecks and then plan accordingly.
Taxes don’t have to be a bummer.