TxSrv <n3_eu[at]comcast.net> writes:

- quote -

My company does the same thing for taxable non-cash items.
For example, if I received a taxable non-cash item worth $200:

Gross wages:
Wages $1111.11
Magic Item $ 200.00
Total Gross: $1311.11

Pre-Tax Deductions:
Health $ 100.00
Flexcomp $ 50.00
401(k) $ 111.11
Total Pre-Tax $ 261.11

Taxable Wages: $1050.00

Taxes:
Federal $ 200.00 (in actuality, computed on $1050.00)
SS $ 71.99 (computed on $1161.11)
Medicare $ 16.84 (computed on $1161.11)
State $ 100.00 (in actuality, computed on $1050.00)
Total Taxes: $ 388.83

Net Pay: $ 661.17

Adjustments:
Magic Item ($ 200.00)
Total Adj: ($ 200.00)

Check Amount: $ 461.17

So the $200 item is added to gross wages so it can
be included in the tax withholding calculations, but
then it gets subtracted off at the end so you're not
double-dipping. Net result -- you get the $200 item,
but the withholding taxes attributable to it are withheld
by the company. No grossing-up is involved.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

nospamtodd[at]yahoo.com wrote:

- quote -

?? I have to see that on paper in the payroll records.

- quote -


That is correct. Except the wording in your first paragraph
doesn't convince me they did it that way. Maybe it's just
me. ;-) It sounds also like they grossed up the value of
the small item, to pay W/H for you. A car is one thing, but
it looks a bit petty to give you a small something and dock
your pay for income tax.

Fred F.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Your position on this is the same as my employer's. But let
me add some additional information, and let's see if it
changes anything. All rewards are merchandise given to the
employee off the paycheck. For example, I was given a
pocket knife as one reward. In order to show withholding
for these rewards, the company adds the fair retail value of
the reward to a pay check computation, withholds on it from
actual income earned during that pay period (hours x pay
rate), and then subtracts the value of the reward right back
out again as an after tax deduction. In effect, income from
one category (rewards) leads to withholding from another
category (earned income).

Here's a hypothical recreation: if my company says they gave
me a car worth $10,000, the paycheck in which that reward
appears would probably be zero due to taxes withheld on it
(20% of 10,000 charged against $2,000 pay during that
period). If later I say I never received the car, $2,000
was still removed and should be sent to the IRS so that I
can get it back.

While the $65 reward that was never received was subtracted
correctly from income on my adjusted W-2, the $18 represents
real funds removed as withholding from actual income during
that pay period and the corrected W-2 should not have shown
this reduction. This is my position.

If we were still in 2005, and if the company found the
mistake then, they could have reversed the whole process as
a negative charge during a later pay period, and all would
have been well. But since we are looking back at something
that has already taken place, different adjustments have to
be made.

I am realizing now that it probably wasn't worth the whole
hassle. I was calling for a completely accurate W-2 from my
large national employer. I just think I am right, and it is
the principle of the thing that has carried me so far. But
it probably wasn't worth it.

Todd

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

TxSrv wrote:
- quote -

IOW, the employer performed what we call "gross up" of the
award you say you didn't get. What was it supposed to have
been for, anyway?

ChEAr$,
Harlan Lunsford, EA n LA

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

ospamtodd[at]yahoo.com wrote:

- quote -

Your employer will have to reconcile amounts reported on
W-2s to the total of taxes paid on their quarterly payroll
tax returns. So, they are not "pocketing the difference."

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

nospamtodd[at]yahoo.com wrote:

- quote -

IRS will not get involved with the employer over $18, nor
will a mismatch trigger any inquiry. However, if the $65 was
"phantom," then so was the $18 withholding. It simply
wasn't withheld from you if the $65 wasn't paid to you, net
of the 18 bucks.

Fred F.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Ok, here's the story...I disputed some award income on my
first W-2 that I received in January; I did not receive a
$65 award, and my employer corrected the W-2 income boxes to
reflect a reduction of $65. However, they also lowered
federal taxes withheld by $18, compared to my last pay stub
of 2005. In other words, they are reporting to the IRS $18
less than was actually withheld, and are pocketing the
difference. I filed my 2005 return on paper utilizing form
4852 to state what I believe to be the correct amounts, half
of which come from that last pay stub. I also have written
a clear request to my employer to correct the W-2 once
again, supporting each correction with evidence from the
last pay stub of 2005.

I am kind of wondering where this puts me at this point. Is
it my responsibility to enforce "truth in withholding" or
does the IRS take on cases like this? If my employer can't
be compelled to give me a better W-2, should I just give up
and ammend the return with the W-2 that I feel is incorrect?
I fear getting some awful letter in a few years from the
IRS, wondering why my numbers differed from my employer's.

Thanks!

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >