Am I doing something wrong?

Submitted by Fun-Boot-7187 t3_1000xzn in personalfinance

Hi, I’m new to US and I earn $80k/yr. I pay $307 per pay check (bi monthly ) for my 401k. I see my taxes are around $900 per pay check. I end up with only 4K in hand In a month after deductions. I spoke with one of my friend who makes $55k/yr and she gets around $3k a month and pays only $150 on her 401k. I’m not sure if there’s something wrong but I feel like my in hand salary is too less.

I would appreciate any thoughts!

Added - (bi-monthly) Gross pay - $3076.93 Taxes and deductions - $928.82 Take home - $2148.11 Thanks

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93195 t1_j2esq2o wrote

Your taxes are your taxes. If you have too much being withheld, you’ll get a refund. If she’s having too little withheld, she’ll have to pay more.

Different jurisdictions have different state and local taxes as well. Places like California and NYC are known for high state and local income taxes. Places like Florida and Texas are known for no state and local income taxes at all.

Deductions for things like health insurance can differ significantly as well, depending on quality of your plan and how much of it your employer is covering.

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blipsman t1_j2eujx5 wrote

Could be differences in withholdings set (will get corrected come tax time), health insurance premiums, etc.

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MikeWPhilly t1_j2esspv wrote

You have over 1 grand more a month in hand and your friend is contributing $450 less a month to her 401k. That’s essentially 40-45% more (401k is pre-tax) monthly than your friend and you make 32% more than her. Seems about right but it all comes down to deductions and details.

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DeluxeXL t1_j2es72g wrote

List your pay and deductions on your most recent paystub.

ETA: Based on additional information, all amounts on your paycheck are consistent. Because you only started working in the US for ~4 months, withholding is likely overestimated. Also, if you have any itemizable deductions, you can further reduce taxable income.

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NorthofDakota t1_j2et6qn wrote

Gross pay is just under $80k, so that seems correct. Since you are paid biweekly, you will have two months where you get three paychecks instead of two. If you were paid bimonthly, your paychecks would be slightly higher.

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shadow_chance t1_j2fait8 wrote

Sounds about right. Not sure if your impression was that US taxes were extremely low, but that's mostly a myth.

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[deleted] t1_j2esgjw wrote

[deleted]

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Fun-Boot-7187 OP t1_j2esmri wrote

Just added all the figures. Do you still reckon something Is missing?

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DeluxeXL t1_j2esqyw wrote

List every tax and deduction separately!

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Fun-Boot-7187 OP t1_j2eu7od wrote

Per pay bimonthly paycheck - Gross pay - $3076.93

Pre tax deductions - 401k- $307.7 Healthcare FSA-$11.04 Medical - $52

Employee taxes - Federal - $426.97 State -$131.11 (GA) Take home - $2148.11

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DCcooking1 t1_j2ey417 wrote

Does your friend have to pay for health insurance at their job/pay less? Some jobs pay 100%/90%

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DeluxeXL t1_j2eurqr wrote

> Per pay bimonthly paycheck - Gross pay - $3076.93

> Pre tax deductions - 401k- $307.7 Healthcare FSA-$11.04 Medical - $52

> Employee taxes - Federal - $426.97 State -$131.11 (GA) Take home - $2148.11

Are you exempt from Social Security tax and Medicare tax? If not, where are they?

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Fun-Boot-7187 OP t1_j2euvhw wrote

Yeah I’m not liable to pay social and Medicare because of my visa status

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DeluxeXL t1_j2evi1p wrote

Can you confirm your pay frequency is actually semimonthly (24 times in a calendar year) and not biweekly (26 times in a calendar year)? Because if you are paid only 24 times a year, you only actually make $73.8k and not $80k

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Fun-Boot-7187 OP t1_j2evx0k wrote

I’m paid twice a month, It’s been only 4 months to my hire here so I’m not sure if it’s 24 vs 26 times.

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DeluxeXL t1_j2ex328 wrote

You're paid biweekly. My calculations can confirm this based on the withholding calculations.

Item Biweekly^1 Semimonthly^1 On paystub
Gross Pay per check $3,076.93 $3,076.93 $3,076.93
Gross Pay per year $80,000 $73,846.32
Federal Withholding $426.78 $412.74 $426.97
Social Security $0.00 $0.00 $0.00
Medicare $0.00 $0.00 $0.00
State Withholding $131.06 $129.01 $131.11
FSA $11.04 $11.04 $11.04
Traditional 401k $307.70 $307.70 $307.70
Medical insurance premium $52.00 $52.00 $52.00

^1 Assuming

  • Federal: Disable "standard deduction"
  • Georgia personal allowance = 1

Since you are "nonresident alien", you do not have the $12,950 standard deduction (See Form 1040NR line 12). Instead, you must itemize. Therefore, payroll computer assumes your deduction is $0 instead of $12,950.

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Fun-Boot-7187 OP t1_j2fa2pc wrote

Thanks so much. I guess it checks out that I’m paid correctly.

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wowsocool4u t1_j2ew6iy wrote

if you are only paid twice per month then you aren't getting paid 80k. I would double check with your boss on the pay frequency. Edit: what days are you paid on?

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Fun-Boot-7187 OP t1_j2ewe9y wrote

I’m paid on Friday, twice In a month

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Werewolfdad t1_j2exjxq wrote

That’s bi weekly.

If you got paid twice a month, you’d get paid on the 15th and 30th, which Could be any day of the week.

If you get paid every other Friday, that’s biweekly

Ten months out of the year you’re paid twice a month. Two months, you’re paid thrice a month.

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DeluxeXL t1_j2evwaa wrote

Are you considered "nonresident alien" for the purpose of filing US federal tax return?

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[deleted] t1_j2estkj wrote

[deleted]

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93195 t1_j2etebw wrote

Biweekly, not twice a month. Multiply by 26. $3077 x 26 = $80K.

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Fun-Boot-7187 OP t1_j2etvxo wrote

Meant bi-monthly, I’m sorry, my bad.

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93195 t1_j2eulfh wrote

No, you meant biweekly, at least if you want those numbers to add up. While most months will only have two paychecks, two months will have three.

Biweekly means you get paid once every two weeks, which is 26 times a year. 52 weeks in a year divided by once every two weeks is 26 times. Your gross pay of $3077 times 26 is $80K nearly exactly.

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Wholenewyounow t1_j2evmjw wrote

If you’re on a visa, why you contributing to fsa or 401? Is your long term plan to stay in the us?

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Fun-Boot-7187 OP t1_j2evseo wrote

If my visa gets picked up in the H1B lottery, then yes. The future plan is to be in the US for at least next 7-10 years. If visa doesn’t work out, I have no option but to go back to my home country

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Wholenewyounow t1_j2ewpz6 wrote

Are you on a tourist visa? 180 days?

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Fun-Boot-7187 OP t1_j2ewtsc wrote

You cannot work legally on a tourist visa. I’m on F1 OPT right now

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Wholenewyounow t1_j2eyh2m wrote

Well that’s a long process. And if doesn’t work out you will need to go back. But again, if not certain, why you contributing to 401 and fsa? If you withdraw money early you pay taxes and penalty. Fsa use it or lose it. Do you use it?

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Fun-Boot-7187 OP t1_j2eyu8g wrote

I don’t use it, and quite frankly I’m so new here I don’t even know if I can forgo it. Any suggestions are welcomed. I may reduce my 401k to $150 per pay check as opposed to $300 rn

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leodoggo t1_j2f0jb4 wrote

How much time do you have left on your visa? Does your employer provide any match to your 401k?

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Fun-Boot-7187 OP t1_j2f98h1 wrote

I have 3 attempts left on my work visa (so 3 years). If selected I have 6 years on my work visa My employer matches 5%

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WatercressSubject717 t1_j2ffypz wrote

You can still contribute to your 401K while you’re on OPT or H1-B. Not sure why people are giving you grief. If you’re not selected and need to leave you can still wait till 59 or so to withdraw it or do it immediately and receive the penalty. There’s no harm to contributing to 401k even if you don’t know your long term plan.

I can’t address your original question though. I’m not an expert.

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