OT: 27 not 26 bi-weekly paydates in 2016?

[Rapid Robert]

I'm forecasting W-2 amounts from a current year paystub.

If I'm not mistaken, if someone is paid bi-weekly, on Friday, and if Jan 1, 2016 was a paydate for them, then

in 2015 they had 26 paydates
in 2016 they will have 27 paydates
in 2017 they will have 26 paydates

This seems like a freebie, but then 26 paydates X 14 days in bi-weekly = 364, so every year we accumulate an extra day [365-364] that is not included, plus one more day in leap years. I wonder how often this happens, and how to explain it for purposes of income tax. (W-2 will show higher amount for hourly-paid taxpayer even if he got paid the same rate in both years).

I also have heard of A 52-53-week tax year (a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month), not sure if that is a related topic or not.

[Rapid Robert]

found more data

I found a calculator and was able to compile the following data:

Year # of Fridays
2008 52
2009 52
2010 53

2011 52
2012 52
2013 52
2014 52
2015 52
2016 53

2017 52
2018 52
2019 52
2020 52
2021 53

2022 52
2023 52

So this happens every 5-6 years for weekly paydates, harder to be sure about bi-weekly, I think there could be a delay effect to the following year, depending on which of a pair of Fridays is the paydate. I assume other days of the week would yield the same result.

Essentially, this means any hourly worker on a weekly/bi-weekly payroll is deferring some realized taxable income in most years, but it catches up with them in the years where the number above goes to 53 instead of 52. People on a fixed annual salary would not have this experience, and I'm guessing would be on semi-monthly or monthly pay schedules anyway.

How do the Pub 15 withholding tables handle this? In 2016, depending on the day of the week used for their paydate, some bi-weekly paid workers are going to get 26 paychecks while other identically paid workers will get 27. That could put them in a higher marginal tax bracket.

[Snaggletooth]

This is NOT Off Topic

...as it is very relevant to those of us involved in payroll. Just to answer a question, I believe any assumption that the IRS factors 27 pay periods into their withholding tables gives them too much credit...

[kathyc2]

...as it is very relevant to those of us involved in payroll. Just to answer a question, I believe any assumption that the IRS factors 27 pay periods into their withholding tables gives them too much credit...

The tables shouldn't be adjusted. Pay dates other than Friday will not be affected. Friday pay dates in which the first one is 1/8 rather than 1/1 will not be affected. Companies that changed scheduled 1/1/16 pay date to 12/31/15 to avoid a holiday will not be affected. Even for those affected the withholding difference would be insignificant.

[Rapid Robert]

The tables shouldn't be adjusted. Pay dates other than Friday will not be affected. Friday pay dates in which the first one is 1/8 rather than 1/1 will not be affected. Companies that changed scheduled 1/1/16 pay date to 12/31/15 to avoid a holiday will not be affected. Even for those affected the withholding difference would be insignificant.

I agree any possible adjustment would probably be so small as to not be worth the bother. Please note that every day of the week, not just Fridays, will have this same pattern, just in different years. It turns out my client's employer actually did change 1/1/16 pay-date to 12/31/15, but that just means they had 27 pay-dates in 2015 instead of this year.

For projection purposes, it actually only matters when determining which is the last pay-date of the tax year, since the all the previous pay periods will be combined into YTD amounts on the paystub. This year it will be clear; last year, what my client's employer did (accelerating 2016 pay-date into 2015) would have thrown off my projection by an entire pay period.