Federal Employees News Digest

Federal Benefits Q&A

QUESTION:

In consideration of the new tax changes for this year, I'm making a mid-year review of earnings and withholdings, so that we don't get hit with a nasty tax bill next April.

Upon reviewing all line items in my E&L statement for PP #14, the year to date amounts are consistently 16x the "This P/P" amounts (not 14x, as I would expect). My pay has been constant ever since the COLA back in January. What gives? And more importantly, how can I project what my W-2 will report as my 2018 income and withholdings?

ANSWER:

You have to remember that your year-to-date payroll information for 2018 includes the first and second pay dates of January 2018. For most employees, the first pay date of January 2018 was for pay period 25 of leave year 2017 (therefore, the salary paid was based on the SF 50 salary for leave year 2017) that ended on Dec. 22, 2017 and the second pay date of January 2018 was for pay period 26 of leave year 2017 (once again, based on the SF 50 salary for leave year 2017).

In other words, you have to be careful not to mix up the leave year (which incorporates the SF 50 salary) and the calendar year (which your W-2 is based on because employees get paid on a cash basis). Also, the new tax law (the Tax Cut and Jobs Act of 2017) tax tables went into effect in February 2018. At that time, employees saw less federal income tax withholding in their paychecks compared to the federal income tax withholding in January 2018.

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Contributors

Edward A. Zurndorfer Certified Financial Planner
Mike Causey Columnist
Tom Fox VP for Leadership and Innovation, Partnership for Public Service
Mathew B. Tully Legal Analyst

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