Check Your Paycheck for Withholding Errors

At the start of each year, my husband and I calculate our taxes for the year and adjust our withholding to get the lowest refund possible. That way we get to use more of our money during the year, rather than give the government an interest-free loan.

Withholding Errors Do Happen
My employer’s payroll company usually gets it right, but as we’ve seen before, my husband’s employer’s payroll company isn’t quite as good at that. Which is odd, because they use the same payroll company. I guess my employer, being larger, gets better service.

At any rate, my husband’s first paystub of the year has arrived, so I entered the new withholding into my tax spreadsheet and discovered that we would overwithhold by a whopping $5600 if the current levels were maintained.

That didn’t seem right to me, so I used the Paycheck Calculator to verify that their calculations were correct.

Yeah, not so much. I can’t figure out how they arrived at this particular figure, but they’re adding $235 to his federal withholding. Interestingly, that’s the same amount they used when they withheld taxes from his paycheck, but forgot to pay him his whole salary. I don’t know what their obsession with $235 is. At one point we had them withholding an additional sum every paycheck because of the marriage penalty. It’s possible that was $235, but that was 6 months and two W-4 forms ago.

To double-check the double-checking, I also used the IRS withholding chart in their tax publication. I looked at several possible calculations and not one of them matched the number the payroll company came up with. I don’t know what they’re doing over there.

How to Handle Errors
If you find an error, take your stub to your HR rep (or whoever does payroll at your company) and tell them it’s wrong. They’ll communicate that to the payroll company or verify that they have the correct information entered into the system if they process payroll themselves. Then check it again when the next paycheck arrives. Unless they seriously messed up, you probably won’t get a refund of the overwithholding.

Obviously, one paycheck error isn’t going to break us, but over a year, it adds up. Sure, we’ll get it back, but I’d much rather have it now. If you agree, take a few minutes to check your paycheck when your first stub comes. You might be glad you did.

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