I work for a communications company and everyone claims that over-time and double-time hours are taxed at higher rates? I have never taken the time to sit down and run the numbers, so I decided to just throw it out there.
Thanks
2007-12-02 13:30:39 · 2 answers · asked by Fiostic 1 in Business & Finance ➔ Taxes ➔ United States
No. Your taxes are computed based on total income for the year. It doesn't matter how many hours were straight time and how many were overtime.
They may be referring to how much is WITHHELD for taxes. That's different.
2007-12-02 13:43:41 · answer #1 · answered by Anonymous · 0⤊ 0⤋
It appears so, here is why
when you earn say $200 a week,
This is only an example, I don't really know the exact numbers but this is how the math is done,
The first $50 is not taxed, then 51-150 is taxed at 15%
then 151-200 is taxed at 25%. Again these numbers are not exact but what I am showing, the lower your pay the smaller the percent,
So when you add on overtime, all that money is earned above the $200 dollars and so it is all taxed at your higher tax rate.
The higher rate probably kicks in around $1000 and not 200 a week. I know that anytime I get an overtime check, they tax the entire amt at 25%.
You can asked your payroll clerk to explain how yours is done exactly.
2007-12-02 13:44:15 · answer #2 · answered by Anonymous · 2⤊ 2⤋
Unless they bump you into the next tax bracket, they should be taxed at the same rate as your regular hours. All of your pay goes into ordinary income.
However, the tax is higher on them since you are paid more per hour for overtime.
Hope that clears everything up. If not, talk to your payroll department.
2007-12-02 13:33:59 · answer #3 · answered by nicknameyo 3 · 0⤊ 0⤋
Not really. Withholding for that paycheck might be higher since taxes are withheld as if you made that same amount every pay period all year. But at the end of the year, pay for regular hours and overtime hours is all lumped together - your W-2 and therefore your tax return don't break them out. If too much was withheld, you'll get it refunded to you.
2007-12-02 15:04:40 · answer #4 · answered by Judy 7 · 1⤊ 0⤋
They are probably right but the only true way is to crunch the numbers. OT can push you into the next tax bracket. It can be a good problem to have.
2007-12-02 13:34:48 · answer #5 · answered by Dennis Fargo 5 · 0⤊ 1⤋
Yeah it should be the same. All you will be doing is making more money so you will be paying more taxes.
2007-12-02 13:34:16 · answer #6 · answered by blueeee 3 · 2⤊ 0⤋
The more you make the more they take. The tax percentage is all the same though.
2007-12-02 13:33:20 · answer #7 · answered by Flying High 3 · 0⤊ 0⤋
should be the same percentage
2007-12-02 13:32:50 · answer #8 · answered by Anonymous · 0⤊ 0⤋