Exempt status?

Question

What have I done? Ok, I won $500 for a costume contest. The money was to be added to my paycheck. A co-worker suggested I change my tax status to exempt. So... I did, under the assumption I would have no/less taxes taken out. I received my direct deposit today and it was $56. I only work 1 day a week, and my normal check ends up being closer to $85. So, I'm hoping that I'm receiving the $500 on a seprate check. ?? What do you think/know about exempt status?

So I just went and picked up my stub, I was shorted 7.5 hours and yes, the $500 was on a different check. Thanx for the info.

Answer 1

Changing to exempt would mean that zero income tax would be withheld from your paycheck. For money from a contest though, they might withhold 25% especially if it's in a separate check.

Look at your pay stub and compare it to the last one to see where the discrepancy is. If the $500 was included on it, you sure should have gotten more than $56. If it isn't, and you worked the same hours as usual, everything should have been around the same except that no income tax would have been withheld - but if you're only working one day a week, and taking home $86 there probably isn't normally much if any income tax taken out anyway. Take your latest pay stub and a previous one to your payroll person and ask what's going on. Something is wrong somewhere.