Getting paid weekly vs. biweekly?

Question

When paid weekly, I had lost about 15% of my check to taxes. When paid bi-weekly for the same job, i lost about 21% to taxes. Would I make more money if i was paid weekly? I really don't understand how taxes are decided, any help?

Answer 1

You might want to ask payroll dept how come it jumped from 15% to 21%. It shouldn't change if your company went from weekly pay to bi-weekly pay. You are getting paid twice as much per paycheck as you were getting before, but that's because you're getting paid half as often as you were before. You should still be getting the same net pay in your bi-weekly paycheck as you were with adding two weekly paychecks together. Either something changed with your payroll dept, your math is not correct, or they are not doing something correctly. No, you aren't making more money if you were paid weekly, you still get the same amount of gross pay over the course of a year. As far as taxes go, federal withholding is based on income level, and what you had put down on W-4 form, social security is 6.2% of gross paycheck, medicare is 1.45% of gross paycheck, and state is based on state version of W-4.

Answer 2

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RE:
Getting paid weekly vs. biweekly?
When paid weekly, I had lost about 15% of my check to taxes. When paid bi-weekly for the same job, i lost about 21% to taxes. Would I make more money if i was paid weekly? I really don't understand how taxes are decided, any help?

Answer 3

Taxes are calculated as a percentage of what you gross. Depending on what you gross each pay period, you will fall into different tax brackets. It is possible that you will be paying more taxes in on a biweekly vs a weekly paycheck. The good news is...at the end of the year, your annual gross will be the same regardless of how often you were paid, therefore your tax liability will be the same. What this means for you is that if you're paying more in taxes on the front side, you may get a larger refund check or at least have less taxes to send in come April 15th.

Answer 4

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Your friend has confused car loans with mortgage loans. Mortgages are long term (typically 30 years) so a biweekly payment is like making 13 per year instead of 12, and it cuts several years off the back end (just how many depends on the interest rate). Doing this with a car won't save enough to justify the check and postage cost. Just make regular payments, and save money for emergencies. Saving habit is much more important to you than ducking a few cents interest.

Answer 5

Weekly Vs Bi Weekly Payroll

Answer 6

There should be no difference in taxes regardless of frequency of payments. If you got paid $40,000 once a year, your taxes will be the same as if you were paid weekly. Taxes are determined based on amount of yearly income. There's something else going on and you need to know what. First, do your calculations to make sure you're right, then go to your boss and show them what you mean. He or she should be able to explain it and if not, you can contact the IRS about it. If you don't really care, just go with the weekly payments.

Answer 7

Something is wrong. If you are paid biweekly instead of weekly, your gross should be twice your weekly gross and your deductions should each be twice the weekly deductions. Check with your payroll department and ask why this increase is happening.

Answer 8

First, your lender has to agree to allow you to make partial payments this way. Many will not. Second, the way car payments are typically applied is accrued interest first, then whatever is left goes to principal. Paying that half a month early would save a small amount of interest, but it might not be worth the extra time and postage. The 'half the payment' method is generally proposed to make half the payment every two weeks. This results in 26 half payments per year or an extra payment which does pay off the loan faster. But instead of half payments, it really is much easier to just add 1/12 of a payment to the normal monthly payment and pay it all on the due date. One payment, extra going to the principal.

Answer 9

That is incorrect...the taxes should be the same. Your payroll department might be still using the weekly tables for bi-weekly pay. Which would make it look like your make twice as much money and be in a higher tax bracket.

Answer 10

Taxes are decided by corrupt politicians that grab money to keep from losing their power base - paid in full by us.

However, the answer you are looking for is: every 6 months, you get a third paycheck in the month. Some companies do their withholding based on two pays a month, therefore withholding higher amounts on the first two pays and NONE on the third paycheck given in the month every 6 months. This happens to my wife, who works for a VERY large company. The total withholding is the same, but since many companies file monthly instead of quarterly, it comes out looking different for a while. Generally, this happens with salaried employees only - since they know what you are to be paid in a year.

If that is not the case with you, get a hold of your payroll people and shake them until your coins drop out of their pockets.