Why are my taxes noticeably higher?

Question

I work in a hotel in Colorado, and at this job I am currently making $8/hr. (Not great, believe me) Anyway, my brother works in a machine shop and a friend of me works for an internet company. They also make $8/hr each. Upon visiting the bank one day, I realize I usually pay between $20-$30 more on taxes a week then they do. We are all within a year or two of age, same marital status, same pretty much everything. We even work in the same city. Does anyone know why my taxes are so much higher? Is there a way I can get them to come down?

As far as I know, all of our W4's are the same. None of us have kids, live with our parents, or are married. Say I wanted to take a look at my W4 and change some of the info... is this possible? Is this even legal?

Answer 1

You are talking about your tax being witheld from each check? That's easy. How much is witheld is totally up to you. It depends on how you filled in your W-4 form when you first started.

It also means that if all circumstances are identical with your friends, you will be getting a much bigger tax refund then them. At $20 a week, that means an extra $1,080 to $1,560 being refunded next year. If you aren't getting that much refunded, they may be writing Uncle Sam a check in April, whereas you are getting money back.

Answer 2

You say that as far as you know your W-4s are the same. But if your incomes are EXACTLY the same and EVERYTHING else is identical then your paychecks would be within pennies of being identical.

Obviously something is different among you and your friends, whether it is total income, withholding allowances, or different local income tax rates, if local income taxes are levied where you live.

At the end of the year when you file your returns, the total tax liability would be the same for all 3 of you, assuming that EVERYTHING else is equal. If you're getting slightly smaller checks each week, you'd get a somewhat larger refund than they do but in the end you'd all be in exactly the same position.

You may be able to adjust your withholding allowances to get more money in your paycheck. Keep in mind that this will reduce your refund at tax time and if you go overboard you may wind up paying when you file.

If you currently claim zero, file a new W-4 and claim at least 1. A single person with one job and no other income never needs to claim zero on their W-4. In fact, you could legally claim 2 since you have only one job. This would maximize your paycheck on payday. Claiming 2 would result in a very small refund or possibly a very small tax bill at the end of the year for most taxpayers. You'd normally be within $50 - $100 of even money with Uncle Sam at tax time.

Personally I hate making interest free loans to the government so I usually set up my withholding so that I have a tax bill of a bit under $1,000 each year. If you owe less than $1,000 at tax time (there are a few other safe harbor exceptions as well) then you won't be facing any penalties or interest for underpayment of tax. I'm comfortable with a $1,000 debt at tax time as I salt the money aside from each paycheck so I can pay it, but I get the benefit of a few $$$ in interest while the money sits there.

Answer 3

The taxes you pay aren't the same question as the taxes you have withheld. They are withholding more but that is based on charts and your W2 the taxes you pay are based on your 1040.
You may have less going into your 401K than they do.

Answer 4

You might have filled out your W-4 form differently. If you did, and are having too much deducted, you'll get it back as a refund, or you can change your W-4 to have them take out closer to what you'll really owe.

Answer 5

Perhaps your company is calculating it wrong. Go online to the IRS.gov and run the calculations to see if they match.

Are you claiming the same deductions as your friends?