Today, I looked in my mailslot and saw not one, but two paychecks. One of them was my regular paycheck (now reflecting the raise for the current pay period), and the other contained my retroactive pay. With avarice aforethought, I opened this second envelope.
One problem: when I looked at the bottom line, my net pay was...NOTHING!!
In order to ensure I don't have to pay taxes at the end of the year, I have an additional $40 federal and $40 state tax taken out of my paychecks, on top of the regular federal, state, and local taxes at the going rate.
My gross retro pay was around $88. It had the usual taxes taken out as a percentage of the gross (around 8 or 9 bucks), leaving me with around 80 bucks to put in my pocket. HOWEVER, since it was on a separate check, and I have the additional money taken out of EVERY paycheck, it also had the additional $40 fed and $40 state taken out. That left me with a big goose egg.
I'll probably get it back at the end of the year, or at least have $80 less to shell out on April 15, but that's cold comfort for someone who is socking away every dollar he can for vacation next month.
As a second shot to the pocket, at the end of the first quarter, before I knew what my raise was going to be, I bumped up my 401K contribution. I expected the raise would be enough to cover it, and the short-term loss in take home pay would be taken care of with my retro paycheck :( Well, the raises this year were pretty small, and it didn't offset my increased 401K. Bottom line: I'm taking home LESS money now than I was three months ago!
I don't know whether to laugh, cry, or blow up an IRS office.