shuffle income from 2006 to 2005 for timeoff without pay

[leotho]

What is the name of your state?I have used up my vacation so I took a few days off last week as time-off without pay. I was told that I will still get paid for these time-off on my next pay check (last one for 2005) and will have the adjustment on my first paycheck in 2006. This does not seem to correctly report my income for 2005 nor 2006. Can my company shuffle some of my 2006 income to 2005?

 

[shortbus]

Maybe, but how is a discrepancy of a few days' pay going to make a difference one way or the other?

 

[efflandt]

Actually they are shuffling some of your 2006 income to 2005 (not 2005 to 2006). But it depends what period of time the payday accounts for (maybe that was up to the previous week).

Unless you are on a borderline tax bracket now, or will be in a lower tax bracket next year, you got the income early and tax on it will not be any different.

 

[shortbus]

There is no such thing as a 'borderline tax bracket'. When you cross over into the next tax bracket, only those dollars in excess of the bracket threshold are taxed at the new rate.

For instance, suppose the tax rate is 10% up to $30K and 25% after. If you earn $30K your tax rate is 10% = $3000. If you earn $36K your tax rate is 10% on the first $30K (= $3000) plus 25% of the remaining $6K (= $1500). Total $4500.

Your tax is NOT 25% of $36K.

 

[efflandt]

Certainly that is what I meant in not so many words. Near the borderline of a higher tax bracket, only the part of income into the next bracket is taxed at the higher rate (maybe not everyone knows that, but they "should"). Maybe I shouldn't have mentioned it, since it is unlikely and insignificant for a few days pay. But it is the only thing that could make any tax difference at all.

What matters for tax purposes is when payment was made (not when work was done). That has apparently already been decided by employer policies in this case.