what are "federal income taxes witheld"?
i am a waitress at a famous hotel/resturant on miami beach! recently, i had a preparer just look over my W-@ and she told me that my "federal income tax" was too low compared my wages for 2006. should i get a second opinion?
Public Comments
- It's the amount withheld by your employer and remitted to the IRS. If you have too little withheld, you can adjust that with your employer going forward. It would mean that you will probably end up owing the government taxes when you file, assuming too little was withheld based upon how much you earned.
- it's money that was taken out of your check each pay check it depends on how many people you claim family wise the more you claim the more on your paycheck but the less people you claim the more you will see on tax return
- In the case of a waitress I could see that happening. The IRS hammers wait staff, and have fixed rates for estimating the amount of tips regardless of what your tips actually were.
- You are in a position where the TIP INCOME will be greater than the posted salary income. If this is the case, you need to pay taxes monthly, or quarterly so that when you do the annual tax report, you are not faced with a big tax bill. IRS standard $5,000 or more (Big tax bill). You can get as many opinions as you like, the end will be that you will either do things right or get in trouble. That is not worth it.
- Tipped employees need to declare tips on a weekly (or bi-weekly) basis in order to have enough income tax withheld. Yes, it's a huge hit to your net pay to be taxed on so much when your gross pay is nowhere near that high, but if you don't want to owe at the end of the year it's necessary. And yes, the IRS requires you to report at MINIMUM 8% of your total sales as tip earnings. If you don't make that much you'd be a lousy waitress. Most waitstaff I know make so much more than that and claim only a fraction of it. And when the customer pays with a credit card, the amount of the tip is right there for everyone to see. So if you claim less than that and your employer suffers through a Sales Allocations audit, you'll end up owing taxes on those credit card tips you never reported or underreported. During the years I did payroll for several large hotels, including bars & restaurants, and as bookkeeper for several restaurants, I never met a single waiter/waitress who grossed less than 15% of their sales in tips (almost DOUBLE what's required by law as the minimum to report, which is all most of them reported). The few customers who undertipped were balanced out by those who overtipped. It's very likely that you were underwithheld. If you really feel like that's not the case, seek a second opinion. You could also figure your taxes yourself. Complete a new W-4 to increase the amount of federal income tax withheld if necessary so you won't have the problem next year. And always be sure to declare tips each pay period so the taxes are withheld at the proper time and you're not scrambling to catch up come tax time. Good luck :)
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