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December 19, 2003
Millian Toms, our local CPA, says employers and
employees who aren’t paying attention are in for a shock next year.
“There’s going to be a big shock coming for
salaried employees or employers if they aren’t watching what they do.”
What’s up?
“This year, 2004, we have 53 pay periods if you
get paid each Friday. It’s the fact that February has 29 days. So let’s say
you’re on a salary of $52,000, and there’s usually 52 weeks, if employers aren’t
careful they will give you 53 checks because of the added Friday. Or, if they
notice, he’s you are going to receive less each week,” Millian says.
“You’ll get $981 your first paycheck in January
instead of a $1,000 gross, and you’re going to say ‘Wait a minute! What
happened!’ And it because if you’re on an annual salary, it’s spread over 53
weeks, not 52.”
If you are paid biweekly and you have a
paycheck due on Jan. 2, Millian says you could have an extra paycheck. If your
first pay period of the year is on Jan. 9, you won’t. That’s 27 pays if you’re
paid on the 2nd; if you’re paid on the 9th, you’re only going to get 26 pays.
“Don’t panic if you’re on an annual salary.
You’re still going to get you $52,000. You’re just going to get it over 53 pays,
not 52.
Employers who don’t catch this will spend more
than they have to or you may not get a paycheck suddenly, when they catch on,
Millian said.
She emphasized this will only hit people who
are paid on a salaried basis. If you’re paid on a monthly or bi-monthly basis,
or hourly, it will not affect you. “And usually these (salaried workers) are the
middle income people who are counting more on that check and now they might get
a cut.”
AND THAT’S NOT ALL.
The State of Michigan, due to their budget
cuts, has cut so many staff members that they cannot process returns, Millian
said. She said the law now requires that any tax preparers, such as Millian, who
do more than 200 returns, must e-file the returns.
If paper returns are filed and a refund is
involved, Millian said the state has told tax preparers that citizens will be
lucky to get their money by December. As it happens, Millian can e-file all
returns.
“But there again, what about the seniors in the
senior centers, where a preparer goes in gratis or for a low amount and mass
preparers all these returns for them? All the ones who usually have refunds
coming are going to be waiting an extra eight months for their refunds, and they
might count on that money.
“So this will actually affect low income people
more. I don’t even know if the state is going to send out a form to these people
letting them know that ‘hey, if you don’t e-file, you’re going to have to wait
for your money.’ So they’re going to have a lot of people calling up and saying
‘Where’s my money?’ ”
The reason things are in such disrepair is
because of the economy, Millian said.
“As we stop spending, the state receives less –
both sales tax and withholding tax. So it’s not just that the economy is down,
but they get a double dip at the state level. The income falls at the state
level, everyone is getting paid less, so their withholding is lower, and we pay
less tax, we have more refunds coming.”
Millian said she’s very grateful she can meet
all her obligations at a time when we have so many people out of work.
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