when we sign on to a vessel and fill out our forms, are our witholdings being held at a tax rate of 12 X our monthly base wages, and our OT, or is it assumed that we only work for 6 months a year? I really didn’t pay attention before.
Your taxes should be withheld based on what the IRS thinks your [I][B]anticipated average[/B][/I] gross income will be, [I]not how long [/I]you’ll be working. The payroll department is guided by rules the gub-mint provides and uses a projected average from the [I]last year[/I] for earnings, not how much of the year you worked. You can elect to have as many exemptions as you want and “pay the piper” on 4/15 or choose fewer exemptions and have more withheld if you like to feel like you’re gettin’ some love (in the form of a refund) from Uncle Sam on April 15th. I personally think it’s foolish to loan Uncle Sam money for free, but that’s me.
Your final tax bill isn’t settled until you file next year and receive a return or pay taxes owed.
The number of exemptions you claim and the amount you earn is used to calculate witholding. You’ll usually see federal withholding taxes deducted but not necessarily state taxes. Social Security withholding is deducted until you reach the ceiling amount (I think it’s 106.8k)
As a mariner, you pay income tax (if required) only to the state where your primary residence is. Don’t fall for the “I’m a mariner and tax exempt”. There are a few really big hurdles to clear in order for that to be true. Get a good accountant, don’t go to the storefront tax preparers. Their people are too transient and very few are experienced dealing with issues a mariner faces.
Agreed, my problem was working for a new york based company that withheld no state taxes. New York state sent papers home but I was on boat for 4 months. Before I could respond they filed judgements and in process of wage garnishment. When calling new york state was explained that tax is owed for days worked in new york state if working for a new york based company,was told i had to file as non resident new york and that would credit toward louisiana amount owed. I paid it like a fool. WRONG!! Federal law PL 106-489 STATES THAT A MARINER OR ANY TRANSPORTATION WORKER CANNOT BE TAXED IN ANY STATE OTHER THAN RESIDENT STATE. I have been in a 2 year battle to get my money back and have judgements removed from credit. Hope this helps someone out there.
It isn’t simply mariner. The vessel has to be engaged in interstate transport (interstate being defined as skipping a state). citation article http://scuttleorswim.com/2010/11/do-mariners-pay-state-taxes/
[QUOTE=captbbrucato;44780]Your taxes should be withheld based on what the IRS thinks your [I][B]anticipated average[/B][/I] gross income will be, [I]not how long [/I]you’ll be working. The payroll department is guided by rules the gub-mint provides and uses a projected average from the [I]last year[/I] for earnings, not how much of the year you worked.[/QUOTE]
Pretty close, but not accurate enough to manipulate exemptions for withholding with. The IRS anticipates your income will be your gross wage for this pay period times the number of pay periods you’ll have in a year. So if your gross wage is $5,000.00 and you’re paid monthly, the IRS assumes your average income will be $60,000.00. Their calculations make no consideration for the possibility that you might only work 6 months out of the year. Has nothing to do with what you made last year. The manner in which it is calculated can be found in IRS Publication 15 (often referred to as Circular E).
I have a background in Accounting and Taxes, I also prepare my own returns, so I’m pretty close on estimating my tax liability for the current year. If you don’t want to give the IRS an interest free loan the two methods that come to mind are 1) pay quarterly tax estimates or 2) have your spouse, if you have one, increase their withholding. As long as you pay as much as your liability for the previous year, you will not be assessed an underpayment penalty but you may have a hefty tax bill to pay in April. Although it is unlikely, due to the schedule we work, you could have taxes withheld and still owe the IRS come April.
I work in New York and live in Missouri. My employer does not withhold taxes for Missouri. Quarterly taxes can be a bitter pill to swallow, for Federal or State. So what I do, and make no mistake, it still costs me dearly, is have an extra amount withheld from each one of my wife’s paycheck to cover the State taxes. Sure, she bitches about the extra $75.00, but at least she’s not crying over the $450 each quarter. Come to think of it, crying versus bitching, that’s not really much of a trade off is it? Damn!
ddupre3 - Contact your Congressmen’s office, you would be surprised at the results you can get. As far as New York? You didn’t work any days in New York, you worked on the waterways, one minute you may have been in New York, the next you could have been in New Jersey. But I’m probably only telling you something you already know by now.