Taxing a Retro Active Raise

I received a 3% raise retro active from 01/01/09. My employer taxed it at the gift tax rate. Is this legal? Should it not have been taxed as regular income at the individual tax rate?

Ad

By Deirdre from New York, NY

December 30, 20090 found this helpful

Well you could call or e-mail visit the nearest the IRS office. They would know better than anyone else.

ReplyWas this helpful?Helpful? Yes
January 1, 20100 found this helpful

The only tax that would be in question is income tax. FICA is a flat rate and is capped anyhow, and Medicare you pay on everything you make at a flat rate. If you overpaid your taxes, you'll be getting back what you overpaid when you file your 2009 tax return(s). Also, if you were paid in a lump sum, most payroll software does not recognize that a payment is for a year's worth of payroll. It thinks you make that every week. So yes, your income tax withheld may be a huge amount in this payment, but as long as it was calculated with your regular exemption status, I don't think it's illegal. I think it would be far worse to find out they didn't withhold enough and you OWED a huge sum.

Ad
ReplyWas this helpful?Helpful? Yes
Anonymous Flag
January 1, 20100 found this helpful

I am curious if your paycheck stub actually said 'gift tax' but irregardless of whether it did or didn't income tax is income tax! Be thankful your employer paid retro pay and deducted the taxes so you won't get a shock that you owe taxes when you file and especially if you don't have cash on hand if you did owe because if you don't have cash on hand you would have to pay penalties and interest to the IRS! If you're entitled to a refund you'll receive one and, if not, thank your lucky stars and thank your lucky stars that you even have a job!

ReplyWas this helpful?Helpful? Yes

Add your voice! Click below to comment. ThriftyFun is powered by your wisdom!

Related
Categories
Budget & Finance TaxesDecember 29, 2009
Guides
Poodle Skirt
Making a Poodle Skirt
TV Dinner Tray
Buying TV Dinner Trays
Yeast for Baking
Buying and Using Yeast for Baking
agility training for your dog
Agility Training for Your Dog
More
🎄
Christmas Ideas!
🍂
Thanksgiving Ideas!
Facebook
Pinterest
YouTube
Contests!
Newsletters
Ask a Question
Share a Post
You are viewing the desktop version of this page: View Mobile Site
© 1997-2016 by Cumuli, Inc. All Rights Reserved. Published by . Page generated on November 18, 2016 at 2:22:31 PM on 10.0.1.90 in 1 seconds. Use of this web site constitutes acceptance of ThriftyFun's Disclaimer and Privacy Policy. If you have any problems or suggestions feel free to Contact Us.
Loading Something Awesome!