If an employer underreports pay, then the worker's future Social Security benefits could be shortchanged. But checking it out is easy.
I’m a certified nurse midwife who is salaried. When we are fully staffed, I work 55 hours a week on average. If we cover extra shifts, we are paid a lump sum rather than hourly. We are paid twice a month, but my pay stub shows that I only work 70 hours per pay period. I work almost that many hours in a single week! When I work extra shifts, it is reported on my check under “miscellaneous” with the lump sum listed.
Some employers don’t break out Social Security taxes from Medicare taxes, and include them both in a line for FICA, which stands for Federal Insurance Contributions Act. The FICA amount should be your Social Security tax plus 1.45% for Medicare. If the tax amounts shown don’t include that “miscellaneous” lump sum, please call the IRS at 1-800-829-1040 to report the situation.I’m retired, 64 and delaying Social Security for a few years.
The certified financial planner also can help you with a tax strategy. Tax withholding on retirement income is usually voluntary, but paying the actual tax is mandatory.The percentage you ultimately pay on the withdrawals will be based on your tax bracket, which could be higher or lower than the 20% federal and 7% state rates you cite.
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