Hi,

I worked for a company for 5 months, which paid me pay stubs for 3 alternative months. Anyhow I got into a new company with more benefits. After a long nagging to get back my money they paid me $6500 out of which $2704 as taxes. It is not mentioned as bonus, but it's a regular payment. My payroll is run based on my Virginia State. I am surprised they paid $1800 for Federal. Each time, for $4166, $1069 used to get deducted, but for $6500, it is surprising for me to see so much of taxes. I am new to this country, never filed taxes before. My friends tell me that I will get back, if I over pay the tax, but what I am surprised and wanted to know is that is it possible to over pay the tax ? And if so, do we get back ?

Thanks
H1 Employee

H1Employee:

When income taxes are over-withheld, the excess withholding is refunded when you file your annual income tax return. Overwithholding is common because of the progressive nature of our income tax system and the failure to properly account for the numerous deductions and credits to which the average taxpayer is entitled.

Since you are a H-1 employee, you must pay Social Security (at a 6.2% rate on the first $90,000 earned) and Medicare (at a 1.45% on all income earned) taxes. Since these are flat taxes, you will get no refund of these taxes.

Be sure to file your tax return no earlier than 1 January 2006 and no later than 15 April 2006 for the 2005 tax year.