Titan Money Matters: Turkey, sales and taxes

In Columns, Opinion

Next Thursday is a day I look forward to all year.

As a person who loves food (I guess family is cool too), Thanksgiving and its week-long break from school is a great way to relax and recharge.

Unfortunately (anyone who has ever worked retail can agree), the joy is short lived.

The day after Thanksgiving, otherwise known as Black Friday, can be the most grueling, tiresome and stressful day on any employee’s calendar.

Shoppers queue up before dawn and lines don’t die down until inventory runs out, the stores close or the employees faint from exhaustion, whichever beats last-year figures.

This time of year can be a truly hellish nightmare, but many can attest that they were first hired during the holiday shopping season.

From malls to restaurants, all of America beefs up on staffing to accommodate the flood of consumers.

Even though the most recent data from the Bureau of Labor Statistics shows unemployment of the nation’s youth to be in double digits, you may have been lucky enough to get yourself a job for the holidays.

If it’s your first job, congratulations are in order, but you may be filled with as many questions about your first paycheck as you are with questions about how to handle a return without a receipt.

After you’ve taken the time to fill out your direct-deposit information (because that’s a no-brainer, unless you like driving to work each time your check is ready instead of having it transferred in the quiet of night), one thing you’ll want to prepare yourself for is surprise.

You may be surprised at how large a bite Uncle Sam takes from your check.

You’ve calculated the amount of hours you worked in the pay period, you’ve crunched the numbers on your sales minus returns, and you’re thinking of an exciting, three-digit number you can look forward to, but did you include your taxes?

Federal income tax, Social Security and Medicare are examples of federal taxes you will see itemized on your pay stub.

In the state of California, you’ll also see a state income tax and a state disability insurance tax (this is what CASDI stands for, if anyone ever wondered).

The amount withdrawn by these agents varies for several factors, such as annual earnings, statutory mandates (for example, the SDI is no more than 1.2 percent of wages and maxes out at $1,119.79 per employee per year) and withholding status.

Speaking of which, the only item of those deductions an employee has the ability to manipulate is withholding.

However, no other deduction has the ability to royally screw an employee like withholding does. When I worked in retail and on commission, one trick many of my colleagues used during the holiday season was to adjust their withholding in a way that allowed them to keep more of their commissions.

If done improperly, these employees could see Uncle Sam keeping more of his commissions during tax season.

Withholding is the amount of allowances you claim on the W-4 form when you start a new job.

Any employee can adjust allowances by filling out a new W-4 in the human resources department.

By increasing your number of allowances, you instruct your employer to withhold less of your federal income taxes, but in doing so you will receive a smaller income tax return.

Even worse, if you don’t adjust your allowances back to normal in good time (like some of my fellow salespeople forgot to do), you could end up owing money instead of receiving that nice bonus from the IRS.

Contrary to popular belief, withholding allowances do not necessarily equal children.

Many think that by adjusting allowances to three, you are claiming three children.

Actually, the allowances are for dependents, which could be children but could also be any individual the IRS deems as such, even someone older than 65.

One can even claim to be exempt from all withholding.

But here’s the catch, folks: If you are already being claimed by someone as a dependent (e.g., mom or dad), you will not be able to claim “exempt” on your withholding form.

As a general rule, you can claim one for yourself and one if you’re single (which means not married, people, not Facebook status), but that’s it.

Other allowances are reserved for head of house, spouses and those dependents you surely don’t already have in college.

If you are still a little unsure how many allowances to claim, the IRS has a very helpful tool on its website to calculate the appropriate number.

The withholding calculator can be found at IRS.gov/individuals and requires that you fill out some basic personal information (single or married, dependent or not, etcetera).

You will need at least one pay stub to fill in the rest of your information, such as your year-to-date earnings and the amount of federal taxes already taken out.

If you’re like me, you probably won’t want to risk claiming too many allowances.

I prefer to let Uncle Sam take a larger bite of my check, because I know come April he’ll pay it forward.

Past refunds I’ve received have paid for a new computer for school and took care of some repairs my car needed.

This year, my refund was enough to stash in the bank and pay all my bills over the summer so I didn’t have to add a part-time job to my summer school schedule.

If your first job has you working as soon as Black Friday, I’ll be praying for your sanity while I avoid the malls at all costs that day.

You’re about to be torn apart by desperate shoppers looking for a deal too good to be true, yelled at by a manager who needs to get you on break before the company has to pay your overtime, and you’ll be surprised at how fast the joy of the holidays is stripped from your holly jolly heart.

But having read this column, one thing that won’t surprise you is the breakdown of taxes deflating your first paycheck.

Godspeed, and good luck!

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One commentOn Titan Money Matters: Turkey, sales and taxes

  • Unlike you, I like having a physical check in my hand to personally deposit. Direct deposit should only be for those who want it; it should not be forced onto those who do not.

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