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CarbonRobot CarbonRobot
wrote...
Posts: 393
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2 years ago
Between 2020 and 2021 my annual income was pretty much the same but in 2021 my federal withholding was 1/5 as much as 2020. I had to write a giant check to the fed. What happened? This was only true at one of my jobs, but my boss claimed it was government controlled.
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wrote...
Educator
2 years ago
If

2020 = $50,000
2021 = $50,000

The tax paid should be the same.

Can you explain this part "withholding was 1/5 as much as 2020" using the example numbers provided above?
CarbonRobot Author
wrote...
2 years ago
If 2020 = $50,000 2021 = $50,000 The tax paid should be the same. Can you explain this part "withholding was 1/5 as much as 2020" using the example numbers provided above?

Lets say 50,600 2021 and 50,000 in 2020. Only about $100 was withheld from me in 2021 and therefore I had to write the government a bigger check. In 2020 my withholding was closer to $750 and the government wrote me a check instead. I don't know why the amount of the withholdings changed.
wrote...
Educator
2 years ago
What do you mean that money was withheld from you? Also, a new government was elected for 2021. Perhaps that has to do with the discrepancy. If you made nearly the same in both years, your taxes could be widely different, unless there are things you aren't disclosing, or simply missed.
CarbonRobot Author
wrote...
2 years ago
What do you mean that money was withheld from you? Also, a new government was elected for 2021. Perhaps that has to do with the discrepancy. If you made nearly the same in both years, your taxes could be widely different, unless there are things you aren't disclosing, or simply missed.

I should mention I'm in the United States. Not Canada. We get money withheld directly from each pay check to go towards federal and state taxes. If too little is withheld we pay more by personal check when end of year taxes are due. It is adjustable at employer level, but I was assured it was not at their end.
wrote...
Educator
2 years ago
If too little is withheld we pay more by personal check when end of year taxes are due.

Yes, that's also the case in Canada. For one employer of mine, I paid the bare minimum in taxes throughout the year, hence I had to pay a larger lump sum at the very end. If your employer held 1/5 as much as it normally holds for taxes, then you got paid 4/5 th of the tax money throughout the year which otherwise hadn't been included in your pay check in 2020. In other words, of all the taxes you owed for 2021, you've only pay 1/5 of them. Hence, you had to write a larger pay check to the federal government this year than usual.
CarbonRobot Author
wrote...
2 years ago
Yes I know why I paid more this year. Because the withholding was less. The question is why far less was withheld this year? Difference in federal policy or some other economic choice?
wrote...
Educator
2 years ago
That depends on your employer. Your employer may have made the decision to take less tax throughout the year so that you'd have more in your pocket. At least for the time being, especially since half the economy had halted due to COVID-19. Just a guess.
CarbonRobot Author
wrote...
2 years ago
They are running it by their accountant. I don't think the other coworkers have had this issue.
wrote...
Educator
2 years ago
They are running it by their accountant. I don't think the other coworkers have had this issue.

It's definitely strange. But I wouldn't jump to any conclusions. Tax season is always a pain in the arse
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