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Thread: Bad Tax Withholding?

  1. #1

    Join Date
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    Default Bad Tax Withholding?

    Anybody else get this message today? That they screwed up tax withholding in January?

    IMG_4761.JPG

    I got this today.


    Sent from my iPhone using TSP Talk Forums


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  3. #2

    Join Date
    Apr 2008
    Location
    Cleveland, Ohio
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    12,090

    Default Re: Bad Tax Withholding?

    What else can they screw up? This new website and software is a complete disaster.
    May the force be with us.

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  5. #3

    Default Re: Bad Tax Withholding?

    The website does not even let me set up a fixed amount installment plan. I have just been making partial withdrawals every month, patiently waiting for installment plan functionality to return.

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  7. #4

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    Default Bad Tax Withholding?

    Quote Originally Posted by Mitchhyman View Post
    The website does not even let me set up a fixed amount installment plan. I have just been making partial withdrawals every month, patiently waiting for installment plan functionality to return.
    Maybe time for a lawsuit. Just put it back the way it was before you screwed it up, please. It worked fine.


    Sent from my iPhone using TSP Talk Forums

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  9. #5

    Join Date
    Jul 2016
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    Texas
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    Default Re: Bad Tax Withholding?

    James, At least you got a message about it. I had to call them and they don't know what they are doing! They didn't withhold enough for me, supposedly should be fixed in February payment.

    They did update the rules but I don't think they told anybody other than publishing updated brochures. I never did understand that the default withholding was married with 3 dependents (that was deleted). When I started getting payments, I filled out form as single with additional $$$ amount. I was compliant with new rules so I guess they couldn't blame the IRS rule change in my situation.

    The IRS change was known when they took over the contract see https://www.wolterskluwer.com/en/exp...quired-in-2023

    OPM is using new form for withholding, once you fill out the form you have to wait 48-72 hours to get the calculated amount. After playing with it a few time and having too much withheld in Feburary, I'll calculate the additional withholding myself in the future. So if you need to change your withholding plan accordingly.
    U.S. citizens, resident aliens, or their estates who are recipients of pensions, annuities, and certain other deferred compensation use Form W-4P to tell payers the correct amount of federal income tax to withhold from their payment(s).

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  11. #6

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    Default Re: Bad Tax Withholding?

    So today I got $31.12 deposited in my bank account from the TSP. That's obviously the "incorrect tax withholding" they had before.


    But here is the kicker- I didn't WANT them to send that money- I THINK (But iI will have to go double check) that I set it up to take an extra amount out of the payout for tax purposes so I don't get hit with a penalty next year. Grrrrrrrrrrrr..


    WTF???

  12.  
  13. #7

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    Default Re: Bad Tax Withholding?

    Quote Originally Posted by James48843 View Post
    So today I got $31.12 deposited in my bank account from the TSP. That's obviously the "incorrect tax withholding" they had before.


    But here is the kicker- I didn't WANT them to send that money- I THINK (But iI will have to go double check) that I set it up to take an extra amount out of the payout for tax purposes so I don't get hit with a penalty next year. Grrrrrrrrrrrr..


    WTF???
    How do you spell incompetent???
    May the force be with us.

  14.  
  15. #8

    Join Date
    Jul 2016
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    Default Re: Bad Tax Withholding?

    Quote Originally Posted by nasa1974 View Post
    How do you spell incompetent???
    TSP

    Last week I called them again. Nothing was corrected. Representative was able to change my additional withholding back to what I had but not sure if it will actually take effect with my February payment or not since payment was being processed same day (2/15/23). Contractor Rep had to access another system requiring second verification code so I hope it is actually corrected now.

    Text 2/16/2023
    Your C- LEF Installment Payment will be issued February 17, 2023. Allow time for payment delivery. Details at tsp.gov. Replies not accepted.

    Email dated 2/16/2023:
    Your payment from the Thrift Savings Plan completed as of February 15, 2023.
    Your monies will be issued on February 21, 2023. Allow for standard mailing time for any portion of your payment that is scheduled to be mailed. Allow 3-4 business days for any portion that will be direct deposited into your account.
    You can see the details of your payment on tsp.gov.
    My account shows that I have withdrawal 2/15 and they are telling me that I won't get it until 2/21 or later? even though they are issuing it on the 17th and it is set up for electronic deposit? 6 days for a payment is ridiculous.

    I got 2 secure messages on 2/16 with the exact same 2 1099-Rs that I received in the mail.
    --Called 1/26, requested corrected 1099-R (Over 3 weeks ago)
    --Called 2/3 Withholdings messed up, Corrected 1099-R sent to operations-no update

    --Called 2/15 Corrected 1099-R last day they are supposed to be mailed out

    Note: My withholding for 5 years was >20%, January's withholding was <5%

    This year I have at least 10 emails & 8 Notifications and not a single one mentions changes to withholdings. Not a single communication from TSP has been useful except the codes for allowing me to access my account that has minimal useful information.
    Last edited by evilanne; 02-19-2023 at 01:53 AM.

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  17. #9

    Default Re: Bad Tax Withholding?

    EA, I got my Jan. w/h payment with withholding for the first time in over 8 years (less than $5) and I just received my Feb. w/h with no w/h. So far no correction of the Jan. w/h? Ain't this wonderful?


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  19. #10

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    Default Re: Bad Tax Withholding?

    Scout,
    I got a check Tuesday, not sure why they couldn't do it by direct deposit but I am thankful that I got it. I am just annoyed at this whole situation and their apparent lack of understanding and delays in processing anything at TSP. They actually took the additional amount out but the calculated amount was reduced by about $10. This may be an IRS issue because it looks like what they have done is reduce the calculated withholding amount by about half of the prior year withholding amounts. They are only withholding based on the assumption that it is the only income you will be receiving for the year. For January, they were using 2022 Tax Rates/Brackets & February is updated based on 2023 figures.

    Figures for example only for single filing status. Any taxable income over the 1st bracket is taxed at higher rate(s) 12%, 22% etc

    2022
    2023
    Annual TSP Income $‎ 23,000.00 $‎ 23,000.00
    Std Deduction
    -$12,950.00
    -$13,850.00
    Taxable Amount $‎ 10,050.00 $‎ 9,150.00
    Withholding 10%
    $1,005
    $915
    Months
    12
    12
    Monthly Withholding
    $84
    $76



    Top of 1st Tax Bracket
    $10,275
    $11,000
    Tax WH/
    Income
    4.4%
    4.0%

    Using my actual figures, I was within $1 of their calculated amounts. If you are in the 12% or 22% tax bracket when added to your pension, you are going to be 8% to 18% short on your tax withholdings.
    If your filing status in MFJ with double the standard deduction, there would be no withholding if your payments are under $26-28K annually if they use the same calculation method.

    It looks like OPM is calculating everything the same way but it does give you option to enter your other income in their new form that is submitted to the IRS but it is difficult to figure out exactly how they are calculating the amount but probably similar to TSP's calculation minus some adjustment for typical withholding. It may work correctly if you don't take any additional withholding anywhere else and I am sure someone got a bonus for coming up with this new system. It would be so much easier IMO if they would let you select an additional percentage or total percentage amount for withholding.

    I think quite a few people are going to be surprised when their refunds are less or they actually have to pay taxes next year based on all these change in withholdings.

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  21. #11

    Join Date
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    Default Re: Bad Tax Withholding?

    Just venting ... Nothing useful to add: What a frigging cluster this new website and apparently the FRTIB is!!

  22.  
  23. #12

    Default Re: Bad Tax Withholding?

    Venting is allowed.
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.

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