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Level 6

Started job in June after graduating college in May, will I need to pay tax on full yearly salary?

I started a job in June after graduating college in May. My full yearly salary is xxx. Shouldn't I only need to pay income tax on the money I earn in 2018, not my listed yearly salary? The root of my confusion stems from the fact that my employer is withholding tax from my pay check as though I will be making xxx in 2018. Will this money come back to me in my refund? Sorry if this is a stupid question Smiley Sad.

 

Any help is appreciated.

Thanks,

Sean.

2 Comments
Level 7

Started job in June after graduating college in May, will I need to pay tax on full yearly salary?

You only get taxed on the wages that you constructively receive in any given tax year. If your salary is $50,000 and you started in June, your wages for the year will be roughly $29,000. You will report then $29,000 on your 1040 and pay tax on whatever is left after your eligible deductions. If your company is withholding based on the $50,000 salary, you will most likely be overpaid for 2018 and will get that back as a refund.

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Catalyst V

Started job in June after graduating college in May, will I need to pay tax on full yearly salary?

They're withholding per pay period, not based on the whole year.  So if you only earned 60% of the annual salary, you'd only have 60% of the annual withholdings also.

 

Any extra withholding gets refunded at year end.