Taxes are an individual matter and should be considered confidential. It is up to you to take responsibility for the accuracy and integrity of tax submissions, which are legally binding documents. Your taxes are affected by multiple factors including your family status and income.
Only you can submit your taxes, and only tax professionals may assist you in preparing them. (Here’s why). City Year employees are legally not allowed to provide you with guidance around your taxes (ex. how to complete your W-4) nor are we able to tell you your stipend amount after taxes (exact amount or range)).
We can, however, provide you a means to estimate the taxes that will be taken out of your stipend each pay period.
What do taxes include and how they are calculated?
Taxes are determined based on federal, state, and local tax rates as well as personal information including marital status, dependents and withholdings. This is not information that we can ask you, a candidate for City Year’s program, to share. What we can do is give you general information about how taxes are calculated. For example:
Do I have to have taxes taken out of my paycheck?
Yes. Most forms of income are subject to taxes – that includes federal taxes, in most cases state taxes and in some cases local city or municipal taxes. Employers withhold a certain amount of money from your paycheck to cover these taxes gradually throughout the year so that you don’t have to pay them all at once.
Why do I fill out the W-4 IRS tax form for my employer, in this case, City Year?
While AmeriCorps members are not employees of City Year, employers are required by law to withhold taxes from anyone they hire, including AmeriCorps members who receive a stipend. Employers, including City Year, typically use the W-4 for this purpose.
What impact does the W-4 have on my paycheck?
The taxes that you, an individual, will have withheld from your pay is impacted by the information you provide on your Tax Election forms. That information tells employers like City Year how much tax to withhold from your paycheck. We use your W-4 to calculate your payroll taxes and we remit those taxes to the IRS and the state on your behalf.
What’s in a W-4 form?
The W-4 basically asks you to provide a) your personal information (name, address, social security number), b) your marital and head of household status, c) whether you hold more than one job, d) number of dependents, and e) any extra money you choose to have withheld from each check to reduce any tax you might have to pay at end of year. It also includes your legally binding signature. See a sample W4 Form here.
Besides my individual information what else impacts the amount of tax taken out of my paycheck?
Where you live and the total amount of your income affects the amount of tax you are required to pay. In general, the more taxable income that you earn, the more taxes you may have deducted. The type of taxes you may have deducted from your pay are: Federal, Social Security, Medicare, State (where applicable) and Local (also where applicable). Some states don’t have state income taxes. For example, Florida, Tennessee, Texas, Washington and New Hampshire are states we serve in that do not have state income taxes).
What other tax events should I expect?
You may also receive other benefits from City Year which are also subject to income tax, specifically:
- Relocation benefit – this amount is taxed before you receive it. The federally determined flat tax rate for this kind of “supplemental income” is 22% of the total amount, plus any applicable state/local taxes and withholdings.
- Segal AmeriCorps Education Award – the taxes are paid based on the amount you use, in the year you use it. You receive a Form 1099 at the end of the tax year which tells you how much taxable income you had/was reported to the IRS.
We recommend using a paycheck calculator to get a better understanding of how your individual circumstances and factors will determine your post-tax stipend amount.
