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Home › Society › Economy › Business, Accounting & Taxes › Gross vs. net taxes paid to the government...

Gross vs. net taxes paid to the government...

Started by stormymaker97 · · 👁 4 views · 15 replies

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Participants stormymaker97Harold Lewis32Lawrence Wright80ruggedmaker2amberotter29
stormymaker97 stormymaker97 NewcomerOP
6 messages
joined Jan 2017
#1 ·
To my colleagues here: I have a question involving a specific calculation that perhaps an accountant might be able to address. The situation is as follows: An individual has been officially registered for eight years under... $1067 What was the gross amount, roughly? $1367Because the credit limit was bumped up, the employer filed a complaint with the Department of the Treasury. Is anyone actually surprised? $1333 Netto ($1733 Gross income from the last three pay stubs, with a verbal agreement that the difference would be paid out under the table... Given that this employer's accountant isn't exactly the most "reliable" individual, is it actually possible to verify if that discrepancy exists? $500 By the month? That is what I was told, anyway. If my calculations are even remotely accurate, I am looking at a significant discrepancy. $333 Monthly... is that all?🤔🤔🤔
Harold Lewis32 Harold Lewis32 Newcomer
7 messages
joined Jan 2017
#2 ·
Difference between what, exactly?
Lawrence Wright80 Lawrence Wright80 Member
16 messages
joined Mar 2015
#3 ·
Harold Lewis32 said:Difference between what, exactly?

Presumably, the gap between the standard payroll cost and the cost of an inflated salary over those three months used to boost creditworthiness.

I am no accountant, but basic math suggests you're looking at a gross difference of $367 per month. A difference of $267 should be what hits the net, though the calculation fails to account for the payroll tax delta on that gross increase.
Harold Lewis32 Harold Lewis32 Newcomer
7 messages
joined Jan 2017
#4 ·
If the surcharge is 18% (New York City), then we're looking at a difference of about $457 (gross2), so I guess I don't see how $500 is actually a good deal?
stormymaker97 stormymaker97 NewcomerOP
6 messages
joined Jan 2017
#5 ·
The application was filed solely for the purpose of securing higher credit limits... yet after three pay stubs reflecting the increased salary ($1333 net), everything was reverted back to $1067 net. To make matters worse, the difference—which in this case would be $267 plus the state taxes—must be paid directly back to the employer. Apparently, the employer was doing the employee a "favor." If I have interpreted this correctly, on a net salary of $1067, the tax obligations amount to roughly $300, given that gross pay always hovers around $1367... whereas on the net of $1333 (which lasted for three months), the gross was approximately $1767, meaning the taxes were $433... If the employer typically pays about $300 per month in taxes, but is now paying around $433, isn't the discrepancy simply 1300 - 900 = $133 plus $267 (the higher salary) = $400 per month? So, I ask those of you who actually understand this field: how on earth did the accountant arrive at $500 per month!? 🤔 Some might suggest consulting an accountant, but believe me, they aren't exactly easy to talk to, and the employer isn't much better... 🤦🙄😠
stormymaker97 stormymaker97 NewcomerOP
6 messages
joined Jan 2017
#6 ·
Harold Lewis32 said:If the surcharge is 18% (New York City), then we're looking at a difference of about $457 (gross2), so I guess I don't see how $500 is actually a good deal?

Los Angeles
Harold Lewis32 Harold Lewis32 Newcomer
7 messages
joined Jan 2017
#7 ·
Employers are shelling out $457 more than they used to just to land someone. So I guess it makes sense that $457 should be coming back. If the accountant can't make sense of $500, then it honestly feels like a total $43 way to charge us extra for a raise 😁
stormymaker97 stormymaker97 NewcomerOP
6 messages
joined Jan 2017
#8 ·
Lawrence Wright80;62214147 said:It presumably falls somewhere between the cost of a standard salary and the cost of an increased salary over those three months to boost one's creditworthiness.

Precisely.
Harold Lewis32 Harold Lewis32 Newcomer
7 messages
joined Jan 2017
#9 ·
Back at it again with $457. I guess just ask accounting. If they didn't pull the number out of thin air, they should be able to explain it.
stormymaker97 stormymaker97 NewcomerOP
6 messages
joined Jan 2017
#10 ·
If my memory serves me, the local income tax in Los Angeles was sitting at 10% before they bumped it up to 15%... though I can't say I'm entirely certain about those figures.
stormymaker97 stormymaker97 NewcomerOP
6 messages
joined Jan 2017
#11 ·
Harold Lewis32 said:Back at it again with $457. I guess just ask accounting. If they didn't pull the number out of thin air, they should be able to explain it.

An attempt at a conversation with the accountant yielded nothing but a response of "well, I said $500 per month"...🙂 🙂 🙂 At first glance, the roundness of the figure seemed suspicious enough. Given their frequent "clerical errors" and such... why else would I bring this up here? 🤦 😠
Harold Lewis32 Harold Lewis32 Newcomer
7 messages
joined Jan 2017
#12 ·
Your accountant just hit you with a new payroll bill. I guess he owes you a beer now. 😁
ruggedmaker2 ruggedmaker2 Regular
469 messages
joined Mar 2018
#13 ·
I’m guessing a new thread about wage garnishments is brewing.
🍿
Look, if you don't have the creditworthiness, you just don't have it. Period.
I honestly don't get this whole nonsense where people try to fake a higher salary just to qualify for a loan.
The laws regarding garnishment are what they are... (and yeah, we could go down a rabbit hole there)... but if someone doesn't actually make enough money to pay back a loan, then why bother inflating their income on paper?

No matter how strict or complicated the legal framework gets, those rules exist to protect the lender, too. They set boundaries. So why try to bypass those boundaries with fake numbers just to snag a loan? You’re supposed to actually be able to pay it back once you have it.

Mind you... I've been working in payroll for years now.
I've seen just about everything under the sun. To this day, I still find myself stuck in email chains with banks, trying to explain protected income levels and garnishment laws to them because of some idiots' mistakes.
I even went as far as requesting (and receiving) an official opinion from the Department of the Treasury regarding loans where the monthly payment exceeds one-third of a person's income.

Seriously, how does a person actually intend to pay that back? Through a direct wage garnishment? Or maybe a standing order?
amberotter29 amberotter29 Newcomer
5 messages
joined Mar 2017
#14 ·
ruggedmaker2 said:I’m guessing a new thread about wage garnishments is brewing.
🍿
Look, if you don't have the creditworthiness, you just don't have it. Period.
I honestly don't get this whole nonsense where people try to fake a higher salary just to qualify for a loan.
The laws regarding garnishment are what they are... (and yeah, we could go down a rabbit hole there)... but if someone doesn't actually make enough money to pay back a loan, then why bother inflating their income on paper?

No matter how strict or complicated the legal framework gets, those rules exist to protect the lender, too. They set boundaries. So why try to bypass those boundaries with fake numbers just to snag a loan? You’re supposed to actually be able to pay it back once you have it.

Mind you... I've been working in payroll for years now.
I've seen just about everything under the sun. To this day, I still find myself stuck in email chains with banks, trying to explain protected income levels and garnishment laws to them because of some idiots' mistakes.
I even went as far as requesting (and receiving) an official opinion from the Department of the Treasury regarding loans where the monthly payment exceeds one-third of a person's income.

Seriously, how does a person actually intend to pay that back? Through a direct wage garnishment? Or maybe a standing order?

It isn't always that black and white. I dealt with a case once where someone bumped up their salary; they could easily afford the loan with their actual pay, but the bank insists on that specific threshold, probably for risk management. I've also seen cases where a woman takes out a loan that her husband actually pays off using his own income... I even know a situation where a parent pays off a loan for their adult child 😁 because the kid couldn't qualify despite having a high income, simply because a co-signer was already tied up elsewhere...
ruggedmaker2 ruggedmaker2 Regular
469 messages
joined Mar 2018
#15 ·
It’s all just different ways to shuffle the deck.
But mark my words, once the person who signed those papers finds themselves broke and facing a lawsuit, then the real chaos starts.
Trust me... I’ve heard some wild stories. But hey, they signed the dotted line themselves, so they can deal with the fallout. Let them fight their own battles.
Still, inflating your salary on paper just to look better for a bank loan? That is absolutely mental.
And dragging your employer into this mess too... honestly...

If someone wants to play games, fine, do it however you want—but involving your boss in this whole scheme? I’m speechless.
I seriously doubt any major corporation would ever touch that kind of nonsense. As for those tiny mom-and-pop shops that go along with it... well, God help them. They really ought to start reading the fine print.
amberotter29 amberotter29 Newcomer
5 messages
joined Mar 2017
#16 ·
ruggedmaker2 said:It’s all just different ways to shuffle the deck.
But mark my words, once the person who signed those papers finds themselves broke and facing a lawsuit, then the real chaos starts.
Trust me... I’ve heard some wild stories. But hey, they signed the dotted line themselves, so they can deal with the fallout. Let them fight their own battles.
Still, inflating your salary on paper just to look better for a bank loan? That is absolutely mental.
And dragging your employer into this mess too... honestly...

If someone wants to play games, fine, do it however you want—but involving your boss in this whole scheme? I’m speechless.
I seriously doubt any major corporation would ever touch that kind of nonsense. As for those tiny mom-and-pop shops that go along with it... well, God help them. They really ought to start reading the fine print.

Risk is always there, even if you have a perfect credit score. 😁 There aren't any guarantees, but I get your point—it doesn't make much sense when you look at it that way. I also think big corporations wouldn't dream of it, but you never know what goes on behind closed doors at the massive firms... 😉

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