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<blockquote data-quote="beentheredonethat" data-source="post: 1126619" data-attributes="member: 4886">Re: UPS/Teamster 401k...Prudential to a Dreyfus self managed account...+22.86% for 20The way the taxes work (I used to do payroll), is that each week&#039;s payroll is looked at on it&#039;s own and it assumes that whatever you earn that week you will earn the same each week for the entire year.&nbsp; So if you have one week witha lot of OT,&nbsp; (let&#039;s just say for easy math, you make 2K dollars), well the federal govt will then assume you will make 104K for the year and based on your withholding, it will determine the amount of federal tax to remove. If on the next week, you earn 1K dollars, then the govt assumes you make 52K per year and it will determine the appropriate tax rate and tax you on that. That&#039;s why percentage of tax can vary week to week. (Usually if it&#039;s very large swings in salary). However, ironically the FICA\Medicare tax is not done this way. I&#039;ll do Medicare since it&#039;s an easier example)For Medicare tax (1.45%) if you earn $10 on week one, you will owe 1.45% * $10 you will owe $.145 which will round up to $.15 The next week if you earn another $10, then the govt looks at total earnings ($20) then it will determine total owed ($20*1.45%) = $.29 cents, it then looks to see how much has already been deducted ($.15) then determines you owe $.14. SS works the same way but with a&nbsp; 6.2%&nbsp; rate. Note: everything you see taken out for SS and payroll taxes is just half.&nbsp; The employer also pays this same amount. (One exclusion to this, is during the past two years the tax relief lowering SS by 2% did not get reduced for employer portion.</blockquote>

[QUOTE="beentheredonethat, post: 1126619, member: 4886"] [b]Re: UPS/Teamster 401k...Prudential to a Dreyfus self managed account...+22.86% for 20[/b] The way the taxes work (I used to do payroll), is that each week's payroll is looked at on it's own and it assumes that whatever you earn that week you will earn the same each week for the entire year. So if you have one week witha lot of OT, (let's just say for easy math, you make 2K dollars), well the federal govt will then assume you will make 104K for the year and based on your withholding, it will determine the amount of federal tax to remove. If on the next week, you earn 1K dollars, then the govt assumes you make 52K per year and it will determine the appropriate tax rate and tax you on that. That's why percentage of tax can vary week to week. (Usually if it's very large swings in salary). However, ironically the FICA\Medicare tax is not done this way. I'll do Medicare since it's an easier example) For Medicare tax (1.45%) if you earn $10 on week one, you will owe 1.45% * $10 you will owe $.145 which will round up to $.15 The next week if you earn another $10, then the govt looks at total earnings ($20) then it will determine total owed ($20*1.45%) = $.29 cents, it then looks to see how much has already been deducted ($.15) then determines you owe $.14. SS works the same way but with a 6.2% rate. Note: everything you see taken out for SS and payroll taxes is just half. The employer also pays this same amount. (One exclusion to this, is during the past two years the tax relief lowering SS by 2% did not get reduced for employer portion. [/QUOTE]

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