Starting next month if you are employed you will receive $13 more in each Paycheck –You may not want to take it.
We all like free money. Although Karen and I are technically self-employed, we do as a corporation and we are employees of our own business. We needed to make some changes to our payroll this week and called our payroll service who processes our checks. After we handled our affairs we asked when we would start receiving the new Stimulus $13 week tax break in our paychecks. I was totally blown away when the payroll specialist said that I should change my withholding so I don’t take it!
"Why," I asked. "Well," she said: "It’s not really a tax cut. What the government did was just change the withholding schedule so you could bring home $13 more each week. But they didn’t change the tax rate schedule, so there is no tax cut. Next April you will owe that money back. Essentially the IRS is just giving you a $600 loan."
And then it got worse. She went on to say that I should be very careful because my income was already close to pushing me into the next higher tax bracket. She was concerned that if I didn’t lower my income a little bit, that I would hit the higher tax rate and it could end up costing me money.
So if you work and receive a W2, you may want to check with your payroll department where you work and adjust your withholding so you don’t get a big surprise next April.
On another topic related to taxes:
State Sales Tax Warning
It is no secret that the various state governments are hurting. California is in such bad shape that the sales tax has gone up to as much as 10% in some counties. With the states seeing revenue from sales tax fall, they are stepping up their enforcement efforts and online sellers, many of whom ignore sales tax.
Just this week I spoke with an eBay seller in Florida who only sold $800 worth of merchandise in Florida last year. She never bothered to report it because it was such a small amount of money. Well it seems that the Florida tax enforcers look on websites like eBay and Amazon to identify sellers to target them for audits. This seller was audited and ended up paying the tax, interest and a $750 penalty.
Each state has its own rules regarding minimum payments, so it will pay you to check with your state sales tax authorities and make sure you are exempt or if not that you are filing the required reports and depositing your sales tax collections.
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Written by eBay Gold Power Seller, Skip McGrath, who makes his full-time lining on eBay