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fed/state ded are larger on my last paycheck - can my ex employer do this?

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  • fed/state ded are larger on my last paycheck - can my ex employer do this?

    I got my final paycheck today and the fed/state deductions are larger on this last paycheck than my previous paychecks - it's been consistent for the last year and 10 months and I had never changed my exemptions. Additionally, my earned bonus pay was not included in the final paycheck. Is there anything I can do? Can my ex employer legally deduct more withholdings on this last paycheck?

    Thanks for your assistance.

  • #2
    Taxes have gone up.


    • #3
      fed/state withholdings

      Thanks for the reply. I realize that taxes have gone up however, my last 2 paychecks in January 2010 had lower deductions as compared to my last paycheck (dated 1/29) and the previous 12 months. PTO was also incuded in my last paycheck. The percentage of fed/state withholdings is noticably larger on the final pay.


      • #4
        It's hard to tell for sure without running the numbers, but for income tax withholding, it is not unusual for the gross pay on a final pay check to be enough higher to put you into a different withholding bracket, hence a higher percentage deduction. It comes out in the wash when you file your taxes for the year.
        Please post questions on the forum rather than sending me a private message or email. That way others who have similar issues have access to the discussion.


        • #5
          Just a thought, but maybe you could just politely ask the payroll department for an explanation? For whatever it is worth, it is in no way to your company's advantage to mess around with your tax withholding, so there is likely a valid reason that things look different. Payroll departments generally do not go out of their way to create extra work for themselves just because they are bored.

          Just to be sure, did anything else change? Gross wages, other deductions? I have done a lot of payroll over the years and if is extremely common for termination checks to not look much like the normal paycheck. Mostly because gross wages are different, but sometimes because there is a whole month's worth of benefit deductions hitting a single check or because some other type of deduction is occurring. But taxes? Taxes are a calculation result, not a decision made by payroll. Modern payroll uses something called a payroll calculator. Taxes are determine by gross wages, and by pre-tax or deferred deductions.

          "Reality is that which, when you stop believing in it, doesn't go away".
          Philip K. **** (1928-1982)


          • #6
            fed/state deductions

            Thanks for your replies.
            Nothing has changed over the last month except this final check included 240 hrs of unused PTO and my last 2 weeks of pay.

            So yes, the amount was larger due to the PTO portion, however is this enough to change the % deduction especially if the previous paychecks have been normal. The difference is significant to me (now that I'll be unemployed).

            Yes, DAW, I will ask politely. Our payroll is through ADP, however, my last check was not processed through ADP - looks like it was written at the corp office.


            • #7
              Since CA law requires that a final paycheck be given on your last day of employment with only limited exceptions, it is by no means uncommon that the final paycheck not be processed through the payroll service, but written by hand by corporate or payroll. The company is not going to want to pay for a full check run just to get one check, and yes, that is what going through ADP would mean. Trust me on this; btdt.

              It does not mean that anyone is deliberately messing around with your deductions. The PTO payment by itself would be enough to change things.
              The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.


              • #8
                Agreed. Past that:
                - I have used ADP for several decades and ADP has always done exactly what I have told them to. This is sort of like a driver saying I did not run over that mail box, my car did it. Right. There is no possibility what-so-ever that ADP is the decision maker on preparing your check. In fact, if it is a termination check, then likely we are talking about a manual check, that may or may not have used ADP's check calculator.
                - Past that, lets say Bob gets paid $1,000 per pay period. Assuming the gross wages, withholding instructions and other deductions stay put, then the check is very predictable. But if Bob terminates and I give him $500 PTO in addition to the $1,000 salary, then we just put $1,500 in gross wages into exactly the same withholding table. The effective tax withholding rates just increased. The tax table being used does not automatically increase in size just because the wages did. While we can blame ADP for this, it would be more accurate to blame IRS, since this is just following the IRS publication 15 instructions. Neither ADP or the employer has any incentive to withhold anything different then what IRS specifies. Now there are several different possible legal withholding methods, and different methods could give different results. But it is (mostly) the employer's choice as to which legal method they use.
                "Reality is that which, when you stop believing in it, doesn't go away".
                Philip K. **** (1928-1982)


                • #9
                  You said your PTO payout was on the same check? It's very possible your PTO payout was taxed at the supplemental rates of 20% federal and somewhere between 6-9% for SIT, which is the employer's option, and very common.

                  What are the requirements for earning the bonus?
                  Last edited by Pattymd; 01-30-2010, 10:48 PM.
                  I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.