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Everyone I know here had their paycheck reduced by 2% of income this year (due to higher federal taxes). Meanwhile, I know people who make above the national average and had their federal tax bill lowered.
Any idea what happened? I thought the tax cuts were renewed...
I thought we'd discussed how the working poor would lose ~$300-500 from their paycheck, because some obscure federal tax credit was lost.
At least Obama helped the middle class. :up:
I recall the Democrats tried to keep the tax credit for working poor, but the Republicans were screaming louder about higher taxes on the wealthy.Quote:
Originally Posted by Loki
And the compromise had Democrats abandon the poor, because they don't vote.
True, the poor don't have powerful, rich lobbyists yanking congress around.
A few possibilities:Quote:
Originally Posted by Loki
1. The payroll software hasn't been updated. I read an article that went into how due to the tax deal being so last minute some employers were not able to make update to their payroll for an accurate withholding rate.
2. SS payroll deduction is 2% of income up to a max of around 100kish over a year. (Since only around 100kish per year is considered for payroll taxes). This replaced Obama's "Making Work Pay" tax credit. That credit was $400 per person and $800 in a situation where one spouse works and the other doesn't. If someone averages 10k a year they get $200 from the new payroll tax change. $20k = $400. $40k = $800. 80K = $1600. So for higher income folks they do get more out of SS payroll deduction for low income folks they get potentially less.
Haven't gotten my first paycheck of the new year, but maybe your employer didn't properly calculate some of the provisions of the temporary tax bill or update their software? The temporary payroll tax cut is across the board.Quote:
Originally Posted by Loki
EDIT: Lewk beat me to it to a few minutes.
My "employer" is the state of Illinois, so I really wouldn't put it past them. I'll see what happens next month. Looking forward to the 2% increase in state income taxes, which should kick in soon.Quote:
Originally Posted by Lewkowski
Well I don't know how much you make Loki but here is what it is on the federal side. On the federal tax rate level if you make less then 20k you will pay more taxes this year then last year. If you make more then 20k you will pay less taxes this year then last year. *This assumes you are single.*
2% state income tax increase? Yuck. I'm glad I don't have any state income tax at all. ;)
I bet you don't have to pay 2% of your income to a union you're not actually a member of either. :o
Ah, I forgot where you are. Well then yes, you're totally screwed. After all, members of Congress are quietly looking into state bankruptcy legislation because of states like Illinois.
FDIC aside, I hope you're depositing those checks in an out-of-state bank. Because I'm sure your local bank has a large chunk of its holdings invested in Illinois bonds. :o
I might be a grad student, but I'm not that financially illiterate. It's all in an east coast bank. :o And the state "forgot" to pay the college about $350 million last year. I think $100 million of that is just gone. The college almost didn't meet payroll last March.
Loki, if you're on a fellowship or stipend you don't pay FICA so the 2% tax holiday won't affect you (but making work pay might not have either). And, seriously? You guys are worried about deposits in Illinois-based banks? Please.
Almost all of the stipend are actually wages for being a TA, and that part is fully taxable.Quote:
Originally Posted by wiggin
What are you complaining about, Loki? You're getting a reduced-cost education, thanks to federal and Illinois state tax payer dollars.
edit: And weren't you in the group of people bitching how Americans making under $50,000 generally don't pay enough in taxes, yet benefit plenty from tax-funded services?
Um, what? My education would cost just as much in an equivalent private university. I'm getting roughly the going rate for a TA.
By FICA I assume you mean - stipends are taxable regardless. That's weird, though, we're required to TA two semesters but they never took a dime for FICA.Quote:
Originally Posted by Loki
I'm not quite sure why they do it this way. I do know that first year, we received a "fellowship" for roughly 3/5 of our stipends and wages for the other 2/5. After that, it's wages for 5/6 of the stipend and fellowship for the rest. The fellowship is untaxable (we don't have to pay SS on it).Quote:
Originally Posted by wiggin
With or without government grants or loans? Comparing public/state residency or out-of-state?Quote:
Originally Posted by Loki
In Illinois corn fields that have a lower COL than, say, east or west coast college towns?Quote:
I'm getting roughly the going rate for a TA.
You've posted quite a bit how "cheap" your COL are, and how "easy" it is for you to live comfortably in a midwestern college town earning a TA salary. While getting a great education to boot. Presumably those things helped you choose that school and its location.
Again, what exactly are you complaining about?
Nearly all serious poli sci grad programs cover all tuition and give a stipend of around $15-25k/year. In-state/out-of-state and public/private doesn't enter the equation.Quote:
Originally Posted by GGT
Doesn't mean I appreciate having my paycheck reduced out of the blue. And if money played a real role in my college decision, I'd be in Texas, where the stipend is 50% higher (them having oil and all).Quote:
In Illinois corn fields that have a lower COL than, say, east or west coast college towns?
You've posted quite a bit how "cheap" your COL are, and how "easy" it is for you to live comfortably in a midwestern college town earning a TA salary. While getting a great education to boot. Presumably those things helped you choose that school and its location.
Spoiler:
Ew, Guinness.
You're saying a stipend of $15-25k/year in Texas buys the same quality of life in NYC or Illinois or San Francisco? :confused:Quote:
Originally Posted by Loki
Ah, so not all stipends are equal. :bored:Quote:
Doesn't mean I appreciate having my paycheck reduced out of the blue. And if money played a real role in my college decision, I'd be in Texas, where the stipend is 50% higher (them having oil and all).
Your paycheck wasn't reduced out of the blue. You said you were financially literate, and you sure as hell should be politically literate, Dr. Loki. :donkey:
I'm fairly sure that nearly $30k in College Station buys more than $18k in Urbana. The people on the East Coast and in San Fran are obviously in worse shape, even if they get $25k.Quote:
Originally Posted by GGT
Still waiting for your explicit complaint, Loki. The working poor getting tax credits didn't matter so much until you found yourself in that category, and it didn't pan out, or what? Before then, it was all just an academic exercise in theory, that you could write papers about?
:bored:
My paycheck today is the highest one I've gotten in the past 90 days.
Realistically the FDIC has been doing fine on this front. But personally yes, I would be worried about having too much money in a local bank in a state like Illinois. It just seems like a place where the risk of many "will never happens" (state debt default, local bank failures due to state debt default, etc) is slightly higher.Quote:
Originally Posted by wiggin
So? No American depositor has lost a penny of FDIC-insured money to a bank failure in the last 70-some years. Not during this latest crisis, the S&L debacle, the latter portion of the Great Depression, nothing.Quote:
Originally Posted by Dreadnaught
Also, while it's likely that IL-based banks have some more exposure to the problems in Illinois, two points: IL is hardly the only state to have a serious budget shortfall, they're just one of the first to enact meaningful austerity to combat it. Secondly, even if local banks are more exposed to the IL market, banks are nationalized so much that it probably doesn't matter. I doubt they hold especially large amounts of IL state bonds compared to other banks, and they probably don't hold much in the way of mortgage debt if they're small (and aren't IL-based or IL-dependent if they're big) - for that matter, unemployment and the housing market in IL aren't even close to as bad as other regions.
Is IL in trouble? Yes. Is that reason to panic and deposit your money in a different bank? Hardly, that's ridiculous. Oh, I wouldn't buy IL debt any time soon, and I'd think long and hard before moving there given the tax and employment trajectories, but the banks are completely unimportant to these considerations. I choose banks on two criteria: convenience and return. Everything else is completely unimportant.
I'm not saying there is extreme risk, the FDIC system has clearly proved its mettle in this crisis. But having your local being in receivership isn't really convenient. But I am willing to wager that a lot of IL banks invest heavily in IL state bonds and money markets that are heavily active tax-free money markets involved in state business.