Supplemental income to feel bigger tax bite

August 22, 1993|By Knight-Ridder News Service

If you receive bonuses, commissions or overtime pay, you soon may see less of that money in your paycheck.

Starting next year, employers generally will have to withhold 28 percent of such wages for income tax, up from the current requirement of 20 percent.

The change was part of President Clinton's deficit-reduction package. The supplemental-pay requirement is one of a host of lesser-known tax items contained in the law.

The higher withholding rate will apply to supplemental income that is paid or listed separately from normal wages.

Among the changes, effective Jan. 1, job-related moving expenses will be harder to deduct. To claim such expenses, a new job must be at least 50 miles farther from your former home than your old job was.

And taxpayers won't be allowed to deduct the cost of meals as part of moving expenses. The cost of house-hunting trips won't be deductible either, nor will the cost of selling one house to buy another.

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