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i work for an employer that has “tipped” employees who have signed GITCA agreements. When calculating their paychecks, the employer does not take actual pre tax deductions from earned wages prior to taking out taxes. They “calculate “ the amount of the pre tax deductions and subtract that amount from the gross wages, (to reduce the gross wage amount) however, they then take tax dollars out prior to taking benefits and 401(k) dollars out, leaving NO money left for the contributions.
Therefore, the employees must pay their benefits premiums with Post tax dollars and they have no contribution to their 401(k). They keep trying to tell me that the government gets their money first no matter what. This does not make any sense to me.
Have you ever heard of “pre tax deductions “ not actually being taken out before taxes? I am being told that the pre tax deductions amount is only a paper transaction.
An example of how they figure taxes is:
3.00 x 80= 240.00 + 500 (GITCA wages)= 740.00
Benefits= 90
401(k)= 25
Total pre tax deductions = 115.
Taxes due Fed, FICA, State, local etc. = 300
They tell me the 300 has to be paid first, so the 240 in cash is taken first leaving a shortage of 60 in taxes and no money left for the benefits and 401(k).
I don’t believe this is correct. Can someone please clarify how the taxes should be taken and if the benefits and 401(k) should be funded prior to taxes being taken.
Thank you
Therefore, the employees must pay their benefits premiums with Post tax dollars and they have no contribution to their 401(k). They keep trying to tell me that the government gets their money first no matter what. This does not make any sense to me.
Have you ever heard of “pre tax deductions “ not actually being taken out before taxes? I am being told that the pre tax deductions amount is only a paper transaction.
An example of how they figure taxes is:
3.00 x 80= 240.00 + 500 (GITCA wages)= 740.00
Benefits= 90
401(k)= 25
Total pre tax deductions = 115.
Taxes due Fed, FICA, State, local etc. = 300
They tell me the 300 has to be paid first, so the 240 in cash is taken first leaving a shortage of 60 in taxes and no money left for the benefits and 401(k).
I don’t believe this is correct. Can someone please clarify how the taxes should be taken and if the benefits and 401(k) should be funded prior to taxes being taken.
Thank you