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Taxed twice?

  1. trish1048 profile image76
    trish1048posted 7 years ago

    I just received a check for my remaining vacation hours that I accrued during my last employment. 
    It wasn't a large amount that I was owed, however, the Federal government saw fit to take 25% tax out of my pittance.
    The thought I have is that I am being taxed twice.  Although the money given to me was for accrued vacation hours that weren't used, the point is, I earned those hours whether or not I used them, so I believe I am being taxed twice.
    The answer I got was that the government looks at it as a gift, therefore, the taxes taken out at a very high rate.

    Am I mistaken, and if not, who do I contact to dicuss the unfairness I feel I was dealt?

    1. DevLin profile image60
      DevLinposted 7 years agoin reply to this

      It's actually looked at as time paid for. Regular wages, income.  25% is quite normal. That's what came out of my checks weekly.

      1. trish1048 profile image76
        trish1048posted 7 years agoin reply to this

        The fact of the matter is I earned the time.  Just as I earn my pay by working, I earn my vacation time while I'm working, giving me hours above my 8 hour days, so how is that considered a gift?  I worked to earn the extra time and by the mere fact of me working doesn't translate into a gift to me, and therefore the vacation pay shouldn't be taxed.

        1. Rafini profile image89
          Rafiniposted 7 years agoin reply to this

          Vacation pay is taxed the same as regular pay is taxed.  Was your vacation pay taxed at a higher rate than your regular pay?  If so, then I would say there was a problem.

        2. DevLin profile image60
          DevLinposted 7 years agoin reply to this

          I used to do taxes. Everyone has said the same from getting it done to themselves. If you had taken vacation while still working, it would've just been a weekly check as alwways, with deductions. Leaving your job, it's like your last check.

          1. Rafini profile image89
            Rafiniposted 7 years agoin reply to this

            I must not be understanding the problem.  My last check (from my last employer) included 7 or 8 days pay, 2 or 3 days vacation, plus another 2 full weeks vacation and a few hours of sick time accrued - the money deposited to my account was more than double what I had been getting each and every payday.  Looking at the amount of money I was given that final check, I would have expected to be pushed into a higher tax bracket for that check alone -but I don't think I was, really.

            1. DevLin profile image60
              DevLinposted 7 years agoin reply to this

              Sounds like you got paid every 2 weeks. They still paid you the same, and txed likewise, but added the 2 to one check. That much would've pushed you to a higher bracket all together for one check.

              Trish's check should've had the same amount as always taken out. I was used to 25%, so I just guess she's in that same bracket.

    2. JON EWALL profile image70
      JON EWALLposted 7 years agoin reply to this

      95trish1048

      How great can it be , you are a taxpayer.

      This week the Democrat Congress will be voting to spend another $300 billion, increasing this years deficit to $1.9 trillion.

      The Democrat controlled Congress is bypassing '' pay-go '' legislation and calling the request an emergency bill.

      '' The Just Say No Crowd ''Republicans will again be voting NO ,since the funds required will increase the deficit.

      THE GOVERNMENT THANKS YOU FOR YOUR CONTRIBUTION.

      1. trish1048 profile image76
        trish1048posted 7 years agoin reply to this

        A very sad state of affairs.  I just heard last night on Jeopardy that the US is the highest debtor in the world at $13 trillion.

  2. KCC Big Country profile image90
    KCC Big Countryposted 7 years ago

    It's a benefit with a cash equavilent.  That's taxable.  You're not being taxed twice.  For the time you worked, you EARNED two benefits, the weekly paycheck and the vacation time.  Both are taxable.  Both are income and you also will show the tax paid in when you file your income tax.

    1. trish1048 profile image76
      trish1048posted 7 years agoin reply to this

      I am not disputing the fact that it was taxed.  I'm upset because they took 25% for taxes, which is higher than what  is normally taken on my pay.

  3. MikeNV profile image80
    MikeNVposted 7 years ago

    It's ordinary income.

    You did not every pay tax on it before so it was not double taxed.

    When you file for your return at the end of the year you will either owe more or get a portion back.  The 25% is an estimation.

    The Government did not take the money your employer withheld the money.

    If you were "entitled" to accrue vacation hours as part of your compensation package it is certainly not a gift.

  4. wilderness profile image99
    wildernessposted 7 years ago

    Had you taken vacation time during your employment you would presumably have been paid for the number of hours you had earned and good 'ol Uncle Sam would have taken his cut.  No complaints.

    Instead you have chosen to go on "vacation" after your employment terminated and be paid for the same number of hours you had earned.  Good 'ol Uncle Sam has taken his cut.  As has been pointed out, if the tax rate has varied it is because it is an estimation, as all withholding is.  If the estimation is wrong, it will be corrected next April.

    1. trish1048 profile image76
      trish1048posted 7 years agoin reply to this

      Well, ok then.  And who determines if it was too high a percentage, the accountant?  (pardon my ignorance here)

  5. kirstenblog profile image79
    kirstenblogposted 7 years ago

    Just thought I might point out a little tidbit here wink

    Now that you have paid your taxes on that income if you go down to the shops and buys some goods guess what? You will be taxed again!

    If you lived here in the UK you would also be taxed when you die so saving and leaving something for your loved ones gets taxed too. Kinda feels like being robbed if you think about it to much.

    Now my real gripe is not that they tax me so much as its how they spend that money. If it goes to public stuff like police and firefighters and even helping out the unemployed and homeless then great. But do your ducks really need a moat? (check out the expenses scandal if your not in the UK). I am not found of buying politicians houses, can't say they have ever bought me a house!

    1. trish1048 profile image76
      trish1048posted 7 years agoin reply to this

      Yes, they do that too here.  Go to a used items store (thrift shop) and those items are being taxed yet again.  Here in Jersey, they tax you to move out of the state as well!

      Corruption if you ask me!

  6. KCC Big Country profile image90
    KCC Big Countryposted 7 years ago

    Regardless of how much they deducted for taxes, it'll all work out in the end when you file your tax return.  If your normal bracket amount is lower, then you'll be overpaid and entitled to a refund (assuming everything else was equal).  The only thing it would "hurt" is not having that money NOW instead of later.

  7. Ralph Deeds profile image65
    Ralph Deedsposted 7 years ago

    Tax bills in 2009 at lowest level since 1950
    A drop in income can trigger big tax breaks and sharply lower rates, sometimes falling to zero.    
    Enlarge image Enlarge     By Tim Boyle, Getty Images
    A drop in income can trigger big tax breaks and sharply lower rates, sometimes falling to zero.
       
    TO THE TAXMAN

    Share of Americans' income paid as taxes:
    Source: Bureau of Economic Analysis
       


    By Dennis Cauchon, USA TODAY
    Amid complaints about high taxes and calls for a smaller government, Americans paid their lowest level of taxes last year since Harry Truman's presidency, a USA TODAY analysis of federal data found.

    Some conservative political movements such as the "Tea Party" have criticized federal spending as being out of control. While spending is up, taxes have fallen to exceptionally low levels.

    Federal, state and local income taxes consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.

    "The idea that taxes are high right now is pretty much nuts," says Michael Ettlinger, head of economic policy at the liberal Center for American Progress. The real problem is spending,counters Adam Brandon of FreedomWorks, which organizes Tea Party groups. "The money we borrow is going to be paid back through taxation in the future," he says.

    Individual tax rates vary widely based on how much a taxpayer earns, where the person lives and other factors. On average, though, the tax rate paid by all Americans — rich and poor, combined — has fallen 26% since the recession began in 2007. That means a $3,400 annual tax savings for a household paying the average national rate and earning the average national household income of $102,000.

    This tax drop has boosted consumer spending and the economy, which grew at a 3.2% annual rate in the first quarter. It also has contributed to the federal debt growing to $8.4 trillion.

    Taxes paid have fallen much faster than income in this recession. Personal income fell 2% last year. Taxes paid dropped 23%. The BEA classifies Social Security taxes as insurance payments and excludes them from the tax calculation.

    Why the tax bite has eased:

    • Stimulus law. One-third of last year's $862 billion economic stimulus went for tax cuts. Biggest reduction: The Making Work Pay tax credit reduced income taxes $800 for married couples earning up to $150,000.

    • Progressive tax rates. Presidents Clinton and Bush pushed through a series of tax changes — credits, lower rates, higher exemptions — that slashed income taxes for poor and middle-class families. A drop in income now can trigger big tax breaks and sharply lower rates, sometimes falling to zero.

    • Sales tax. Consumers cut spending sharply in this downturn, thereby paying less in sales taxes.

    A Gallup Poll last month found that 48% thought taxes were "too high" and 45% thought they were "about right." Those saying taxes are "too high" remain near a 50-year low.

    The lower tax burden should last at least through 2010, says Roberton Williams of the Tax Policy Center, a think tank in Washington, D.C. "Virtually all the stimulus tax cuts expire at the end of the year," he says. "So the key decision is whether to extend them into 2011."

    1. wilderness profile image99
      wildernessposted 7 years agoin reply to this

      You forgot some reasons for the easing of the tax bite:

      taxes left out because they're "insurance payments"

      taxes left out because they're "fees"

      taxes left out because they're "special purpose" (ie gas, cigarette, liquor, etc)

      unpaid property taxes because of falling values and/or loss of home.

      I could go on and on.

      Your transparent attempt to spin a lie into something believable is laughable.  If you want to compare apples to apples, check total personal income vs total government income in 1950 and 2009.

      1. Ralph Deeds profile image65
        Ralph Deedsposted 7 years agoin reply to this

        Taxes are lower in the U.S. than in any other major industrialized country, and the roads, schools, health care and other services are inferior than in most of those countries. I'm not spinning anything. I merely posted the results of a report on taxes by an independent agency. If you think taxes are too high what services are you willing to cut or give up?

 
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