Employer contribution from salary

[EngWiPy]

In general, is the employer contribution (I am not sure what that is) deducted from the employee salary? Is it normal to receive an offer saying that the income tax, and the employee and employer contributions will be deducted from that salary offer?

 

[mfb]

Which country?
I haven't heard of such a model. The idea of an employer contribution is that it is paid by the employer and not part of the salary.

 

[Borek]

That's how it works in Poland. Part that goes into the retirement fund is said to be paid 50/50 by employer and employee (as if it really mattered, it is just deducted).

 

[jtbell]

In the US, I've never heard of the employer contributions to a retirement fund/plan (Social Security, 401(k) plan, 403(b) plan, etc.) being deducted from gross salary. You receive that money on top of your gross salary, it doesn't appear on your payroll statement, and you can't access it until you meet the plan's conditions. The employee contributions are deducted from your gross salary and appear on your payroll statement. They also affect your taxes; the employer contributions don't.

 

[EngWiPy]

The offer is from a European country. I am not sure if this is how offers are given in Europe. In my last job in Canada, I only paid employee contribution and income tax (as far as I am aware of). I didn't have anything to do with the employer contribution. When I asked about my net salary after all deductions for this new offer, which is what matters to me at the end to avoid all the deductions details, they were vague and ambiguous with me, saying these are personal information and thus cannot calculate my net salary and such I feel I am being misled, and there is something they don't want to reveal to me. Am I right in feeling this way?

 

[Vanadium 50]

The offer is from a European country

ARe you going to tell us which one or not? I am flabbergasted by the number of people who want country-specific advice, but won't say which country,

 

[EngWiPy]

That's how it works in Poland. Part that goes into the retirement fund is said to be paid 50/50 by employer and employee (as if it really mattered, it is just deducted).

I know it is 50/50, but from what I know, the employer contribution is added in the background so the employee receives a gross salary exactly as offered. It is misleading and confusing when the employer contribution is deducted from the employee salary, especially there is no clear explanation about this. You need to know finance terms like employer cost, gross salary, and net salary to understand this on your own. It is like a trick to make candidates believe they are receiving a good offer, while in actuality it is not as they may have expected.

 

[russ_watters]

The offer is from a European country. I am not sure if this is how offers are given in Europe. In my last job in Canada, I only paid employee contribution and income tax (as far as I am aware of). I didn't have anything to do with the employer contribution. When I asked about my net salary after all deductions for this new offer, which is what matters to me at the end to avoid all the deductions details, they were vague and ambiguous with me, saying these are personal information and thus cannot calculate my net salary and such I feel I am being misled, and there is something they don't want to reveal to me. Am I right in feeling this way?

Well, they are almost certainly right that they can't calculate your take home pay, but again the specifics depend on the country.

Listing the employer contribution in gross salary is misleading, but also easily filtered out.

 

[Borek]

The only way to make sure how much you will really get is to ask about the net salary ("na rękę" - "paid to hand"). Sadly, Polish system is complicated and misleading so even people who want to be clear are often misunderstood.

 

[EngWiPy]

The only way to make sure how much you will really get is to ask about the net salary ("na rękę" - "paid to hand"). Sadly, Polish system is complicated and misleading so even people who want to be clear are often misunderstood.

That's what I did. But they said they cannot calculate it because this is personal information?! But I am the person of concern. This is not the first offer I received, and every time I ask about the net salary, I receive a direct and clear answer, except for this one. I can use online tax calculator to calculate my net salary, but it shows my net salary from my gross salary not from the employer's/company's cost.

 

[mfb]

Last try from my side: Which country?

Europe has 50 different countries with 50 different regulations.

 

[russ_watters]

That's what I did. But they said they cannot calculate it because this is personal information?! But I am the person of concern. This is not the first offer I received, and every time I ask about the net salary, I receive a direct and clear answer, except for this one. I can use online tax calculator to calculate my net salary, but it shows my net salary from my gross salary not from the employer's/company's cost.

You said your last job was in Canada; did you pay income tax based on that job?

You really should know that it is difficult for a company to calculate your take home pay before you are hired and it isn't something to expect. Indeed, you might want to double check the others because odds are good that you misunderstood each other.

 

[jtbell]

But they said they cannot calculate it because this is personal information?!

If this is a non-English speaking country, I suspect that their phrase "personal information" may be simply a poor translation and it should really be "individual circumstances."

In the US, the amount of income tax you owe depends whether you're married, how many kids you have, how much of your salary is going into a tax-deferred retirement fund/plan, how much other income you have (and what kind of income), etc. The amount your employer withholds from your salary is only a starting point towards approximating the tax you actually owe. You have to "true up" your actual annual taxes early the following year (the infamous April 15 deadline).

In the meantime, you can adjust the amount withheld for retirement using whatever procedure your employer provides. This in turn affects your taxes. You can adjust the amount withheld for taxes by filing a W-4 form with your employer, with the understanding that you eventually have to make up any discrepancy as described above.

I don't think anybody here expects to be able to find out a precise number for take-home pay before their employer actually goes through the monthly payroll process at the end of their first month on the job. At best one can make an approximate guess.

 

[EngWiPy]

If this is a non-English speaking country, I suspect that their phrase "personal information" may be simply a poor translation and it should really be "individual circumstances."

In the US, the amount of income tax you owe depends whether you're married, how many kids you have, how much of your salary is going into a tax-deferred retirement fund/plan, how much other income you have (and what kind of income), etc. The amount your employer withholds from your salary is only a starting point towards approximating the tax you actually owe. You have to "true up" your actual annual taxes early the following year (the infamous April 15 deadline).

In the meantime, you can adjust the amount withheld for retirement using whatever procedure your employer provides. This in turn affects your taxes. You can adjust the amount withheld for taxes by filing a W-4 form with your employer, with the understanding that you eventually have to make up any discrepancy as described above.

I don't think anybody here expects to be able to find out a precise number for take-home pay before their employer actually goes through the monthly payroll process at the end of their first month on the job. At best one can make an approximate guess.

As far as I know, what you are talking about (if you are married, have kids, ... etc) is considered when filling the tax forms at the end of each tax year. If you owe taxes, you pay them. But from the salary, there is a well-define tax rate scale depending on the annual income. The problem with providing offers with employer's cost and not gross salary is that the employee and income tax is calculated from the gross salary and not from the employer cost. Providing the employer cost makes it difficult to guess how much your net salary will be, especially if you don't know how much exactly the employer contribution is. In some countries, it's not 50/50, but the employer pays more, which makes the gross salary smaller. For a foreigner who is not familiar with the regulations and numbers in other countries, these calculations are a puzzle and there is a good chance for them to be far from a good approximation. This is the thing. I would be changing countries, and I cannot just hope and rely on my guess with the lack of reliable information, and wait until the first month until my salary is deposited. There are online tax calculator for countries, but all of them use the gross salary. I could form a guess using them. But again, with employer's cost, it is not straightforward.

 

[Mark44]

As far as I know, what you are talking about (if you are married, have kids, ... etc) is considered when filling the tax forms at the end of each tax year. If you owe taxes, you pay them. But from the salary, there is a well-define tax rate scale depending on the annual income.

No, that's not true, at least here in the US. When you start a job here, you fill out an IRS W-4 form, listing any deductions you might have other than yourself. If you have more than just a single deduction for yourself, the amount withheld from your pay is smaller than if you have 1 or even 0 deductions.

 

[russ_watters]

But from the salary, there is a well-define tax rate scale depending on the annual income.

How do they know what your annual [taxable] income is unless you tell them about your second job? Your retirement savings? Your non-taxable expenses? Your deduction for dependants?

As far as I know, what you are talking about (if you are married, have kids, ... etc) is considered when filling the tax forms at the end of each tax year. If you owe taxes, you pay them.

But if you don't factor that into the withheld taxes, you are OVERpaying, and who wants to do that?

 

[Borek]

But if you don't factor that into the withheld taxes, you are OVERpaying, and who wants to do that?

I have a feeling you look just from the US point of view and you are ignoring fact there are strange peculiarities in tax systems. In Poland if you work in more than one place you have to pay kind of a social security tax in each of them - but you will get your money returned back when your taxes are finally calculated at the end of the tax year. Who wants to do that? Nobody. But you have to play by the rules or you will get fined.