Is uncle sam taking too much money out of my paycheck?

Question

I earn $5000 monthly and my deductions are as follows:
FICA $310.00
Medi $72.50
Fed $835.58
State $254.10
Local $30.00
total $1502.18
which leaves me with Net pay $3467.82. I am 23yrs single male, with no kids, mortgage, car note and live in los angeles. am i paying to much in taxes (if so, why) or is it just about right? what can i do to reduce my deductions? I also need the explanation of FICA and Medi. Thanks

Answer 1

I don't know if you are paying too much in taxes or not because I have no idea what your possible deductions are.

When you file your tax returns, if you get refunds, then you had too much tax withheld. If that is the case, then file a new W-4 form to have less taxes withheld from your paycheck.

To properly determine your correct tax liability, you will need to know your total expected deductions for 2008. Then you should file a corrected W-4. For 2008, you can claim one exemption for every $3500 in planned deductions regardless of your income. Planned deductions are the total of your personal exemptions plus the greater of your itemized deductions or personal exemptions. Any pre-tax deductions are not considered as part of the equation. Read IRS Publication 15 for more details. Also, read the similar Publication for CA and LA.

Answer 2

You are paying exactly the correct amount in FICA and Medi.

FICA stands for Federal Insurance Contributions Act, which is the official name for the law saying that you must contribute to social security. This deduction is your contribution to social security. By law the rate is fixed at 6.2%. You cannot reduce this withholding.

Medi is short for medicare. By law, the rate is fixed at 1.45%. You cannot reduce this withholding.

Fed is federal income tax. If you claimed only one (1) allowance on your W-4, $254.10 is correct. If this is your only job, then you can reduce this withholding by giving your employer a new W-4 claiming two (2) allowances. Enter one (1) where the form says "one for yourself" and one (1) where it says "if you are single and have only one job". This will reduce this withholding to $764.75. You may be able to reduce this withholding further by completing the worksheet on the back of the W-4 form, including entering the information about your itemized deduction for mortgage interest, and claiming the number of allowances indicated by the worksheet. (More allowances means less withholding, and vice versa.)

The next withholding is California state income tax. This figure looks wrong, but by only $0.50, so I would not worry about it. As with federal income tax, if you want to reduce this withholding significantly, you can do so by claiming more allowances. To change the number of California allowance, use Form DE 4.

"Local" is apparently (based on the amount) California State Disability Insurance. It is misidentified, but the amount is correct. This deduction is mandatory, and you cannot reduce the amount.

Answer 3

What deductions are you claiming? If you're single, you can claim "none" meaning more taxes are taken out or you can claim "one" which means less will be taken out. It probably doesn't differ much though - ask your HR person.
At the end of the year, do you get a tax refund? If so, then that means you're taking too much out. Ideally, you shouldn't owe or get a refund - well, ideally for the government (that's an idication that you're claiming the correct amount).

FICA is the amount you pay towards Social Security. I'm not sure what "medi" is...your portion of health insurance?

Answer 4

Uh, that's the Dems position. The money withheld from our paychecks ran out a long time ago. Originally, unemployment benefits were only designed to last 26 weeks. Now they are 99 weeks and congress is going to extend them even further. So where does that $34 billion (originally $120 billion) come from? The Dems want to borrow it. All the GOP is asking is that the congress follow the PAYGO that was passed in February. In other words, the money can't be spent unless it is cut from somewhere else. It's called being responsible. Obama is misrepresenting the GOP and you were too lazy to look it up.

Answer 5

Sadly, that sounds about right. I'm also 23 and in a lower tax bracket than you and I am taxed 25% of my income monthly. The only other thing you can do is claim yourself on your W-4 if you already haven't. Otherwise you should at least get a nice refund on your tax return.

Answer 6

those taxes are right, probably the only bad thing about living in Cali. state income tax maxes out at 9.32% if you make over 40K

increase your 401K or IRA contributions to decrease your taxable income. not much a single person can do if you are already a home owner.

Answer 7

Nope that is right but at the end of the year you get a lot back.

Answer 8

You can thank decades of democrat controlled congress for all those taxes.