Just Asking: What’s the tax refund situation?
Dear Samoa News...
I recently have been told about Amerika Samoa's Tax Refund situation.
It was explained to me that when someone goes in to file their tax, the government will take a 2% cut off their W2 before filing. Once the government figures out what the person's refund amount would be, again the government will take another cut, this time 6%.
How could this be if its true? I'm not an accountant or an expert on taxes but common sense tell me if it sound wrong or feels wrong, it is wrong. This whole thing sounds wrong in so many levels.
Respectfully request if you would inquire and report on the truth about this please.
I don't believe the ASG is this heartless to their people.
A concern citizen
Answer by Samoa News Staff:
The 2011 personal income tax owed is 6%. This is the Samoa Withheld Tax (SWT) 4%, plus the 2% added on, because, of a tax bill passed in 2011 — which makes this extra 2% retroactive to January 2011 and set to end (sunset) in December 2011.
This brings the total local personal income tax percentage owed to ASG to 6% on your 2011 gross income — not 8%.
For the math: take the GROSS salary amount on your W-2 form and multiply it by 6%. This total tells you how much you owe ASG in SWT for 2011.
You can also take the GROSS salary amount on your W-2 form and multiply it by 4%, and then take the GROSS again and multiply it by 2%. The two totals will add up to 6%, again the SWT amount you owe ASG for 2011 — 6%.
Then, take a look at your 2011 W-2 and see how much your employer deducted for SWT from your pay check in 2011. This is the local tax amount you list as paid already on the tax form you are filing.
The key here is:
If your 2011 W-2 SWT Total comes out less than the 6% amount (you just worked out), then you will owe ASG the balance.
If your W-2 SWT Total comes out to more than the 6% amount, then ASG owes you the difference (your tax return amount, which is separate from your Child Tax Credit amount if you qualify).
And, if the 6% amount is equal to the amount on your 2011 W-2 SWT Total , then you don’t owe anything, and they don’t owe you anything.
Exception: There is a line on the tax form that states after all your deductions, the tax amount you pay is the one greater or equal to the 6% amount you owe ASG. Remember: this is not the amount listed on your W-2 form (even if it is the same) — because your W-2 SWT amount is the one your employer has reported and already paid to ASG — it’s the SWT amounts your employer deducted from your payroll checks.
BOTTOM LINE: THE 2011 SAMOA WITHHOLDING TAX AMOUNT IS 6% ON YOUR GROSS SALARY/ INCOME, NOT 8% — NO MATTER HOW IT’S ASSESSED!
Argue it with your tax processor if you think they are taking more than 6% of your Gross Salary/ Income — let them explain to you, why the amount is larger than 6%.
The additional 2% income tax of 2011 law is no longer in effect, as of January 2012. This means your employer right now should be deducting only 4% from your pay check, unless you tell them to take out more than that — it is up to you.
However, there is a new 2% tax bill passed and signed into law as of 3 weeks ago.
It is for the government to pay back the $3 million interest free loan it is taking from the Workmen’s Compensation Fund account and giving to the hospital. After the loan is paid back, this same 2% will be used to fund LBJ Medical Center operations.
This new 2% tax hike is added to the present base of 4%, which means the taxpayer is back to paying the government a 6% tax on their income.
But, there are two differences between this 2% income tax and the one last year.
First: This one is only owed from the time the bill is passed and signed into law by the governor (+ 30 days, which is March ... ). It is not retroactive.
Second: This one has no sunset clause, which means it will continue until another law is passed and signed by the governor to stop it from being owed by you to the government.
The American Samoa Government local base payroll withholding tax is now 6% — not 8%.
For bookkeeping purposes the tax office may again keep the new 2% tax separate from the old base of 4%, for 2012 filing, in order to figure out how much the individual tax payer will owe as of when the law was enacted. Meaning, you don’t owe the 2% from Jan. 2012, you owe it from the time the law became ‘active’ — March .... The first payroll after this date should reflect the new 6% deduction, and all payrolls thereafter.
It is unclear at this time, if there is an additional income tax funded bill being introduced, which is different from this ‘new’ 2%.
There is the government’s proposal for the $10 Million for the Off-island Medical Program; and there is the $8 Million the government is proposing as a loan from the ASG Retirement Fund for the LBJ Medical Center.
In these proposals there are import tax and fee hikes proposed to pay for these bills, and there is also a 4% income tax mentioned.
If this does come to pass, then the American Samoa personal income tax will be at 10%.
Right now, these two bills don’t seem to be moving through the Fono — House and Senate — with the current 3rd regular session ends March 9.