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Home > 2014 Overtime To Date - Unsolicited Advice about taxes

2014 Overtime To Date - Unsolicited Advice about taxes

November 19th, 2014 at 01:35 am

I have been incredibly lucky to

1. Have overtime this year up to 15 hours per week (until unlimited OT was announced this week)

2. Have the ability to work that overtime from home (makes it MUCH less stressful!)

As of my last paycheck, I have worked 234.07 hours of overtime year to date

Last week, I worked an additional 5.25 hours.

This week, I am committed to working 15 hours, but with unlimited overtime, I am hoping to make it 25. I worked 5.5 hours of OT last night and will be working 6 hours tonight.

Given that my husband & I are going to be filing taxes together for the first time, I have been very aware of my income and where that puts us in regards to tax rates.

However, I have had so many people tell me that I shouldn't work OT because its not worth it because of the extra taxes. I have heard the debates back & forth on that topic... but my OT has only benefitted us.

Feel free to share you thoughts Smile

Posted in Overtime | 10 Comments »

10 Responses to “2014 Overtime To Date - Unsolicited Advice about taxes”

  1. creditcardfree Says:
    November 19th, 2014 at 01:55 am 1416362129
    1416362129

    Some people don't get taxes! I say if you are happy working extra then go for it. The income is taxed, but it isn't like you are working for free!

  2. doingitallwrong Says:
    November 19th, 2014 at 02:15 am 1416363305
    1416363305

    It might not make much of a difference, depending on your income level; if you're on the border of a tax bracket, any overtime that goes over the limit on the lower bracket will be taxed at the higher rate. That said, you're paying at most 10% more in tax so still get the benefit of 90% more money. Wink

  3. HouseHopeful Says:
    November 19th, 2014 at 02:37 am 1416364655
    1416364655

    Exactly what I think! I don't mind the OT and I want the money :P But yeah, I refuse to try to educate people who tell me I am going to lose money. No use arguing.

  4. scfr Says:
    November 19th, 2014 at 03:04 am 1416366284
    1416366284

    I remember having to explain tax brackets to my immigrant husband. It is not an easy concept to grasp. So many people incorrectly think that if you reach a higher tax bracket your entire income gets bumped up in that bracket and you lose money. Khan Academy has a nice little video. http://www.youtube.com/watch?v=DSWP8pkjmuQ

  5. Kiki Says:
    November 19th, 2014 at 05:23 am 1416374630
    1416374630

    I will work any and all OT I possibly can.

    But...my employer puts it in as CTO unless it is an emergency and paid. That means I have to wait until it has aged 12 months on my accounts before they pay me out for it. They encourage us to use the time we have but I have so much vacation and other time off I would rather have the money - even if I have to wait a year for it.

  6. Househopeful Says:
    November 19th, 2014 at 12:35 pm 1416400500
    1416400500

    scfr - Thanks for the link! Kiki -we don't have CTO options, but my employer is incredibly flexible with time (thank goodness)!

  7. MonkeyMama Says:
    November 19th, 2014 at 01:50 pm 1416405018
    1416405018

    I think overall that there is not much of a marriage penalty in the current tax code. (Though it's impossible to give any useful tax advice without knowing more, because the tax code is anything but simple, and there are certainly many exceptions to that statement. Wink ).

    That said, I am personally in a place where I don't find that the OT pays off so much. At some point there is a significant middle class squeeze. IT is certainly very possible to make more money and to not take home more money. There is a lot more to the current tax code than your tax bracket. (I am very square in the 15% tax bracket but our marginal tax rate is much higher. Every extra dollar we earn reduces our credits and deductions, so is why the extra income is so heavily taxed. I am not anywhere near AMT territory, which is a whole other nasty thing).

    In your case? Do your taxes early next year and see how it sorts out. More money is more money, but I am also a big believe in cost/benefit. If my OT is getting taxed the crap out of, then maybe I'd make more money with a lot less effort on the side. That's the way I approach it. This is a pointless discussion without knowing your exact tax situation, which I figure you probably won't know until you do your taxes. I will hope that your OT isn't getting taxed into oblivion!

  8. Househopeful Says:
    November 19th, 2014 at 07:43 pm 1416426190
    1416426190

    thanks MM - I definitely know that there are a lot of factors, but I have run the #s based on the IRS's 2014 tax rates and feel very comfortable with where we will hit in taxes.

    The benefit at this point is the amounts that I net PLUS the fact that I can complete the overtime from the comfort of my own home. Without that bonus, I doubt I'd do as much as I currently do Smile

  9. snafu Says:
    November 19th, 2014 at 11:27 pm 1416439629
    1416439629

    If your employer hasn't been withholding tax from OT, is it your responsibility to pay at least an estimated sum quarterly? What are the rules on penalty assessments? If there is a penalty, I'd try to work out a reasonable guesstimate based on total taxable income and pay before the end of the yea.r If you ultimately owe tax, no penalty, you have until mid April 2015 to accumulate the sum needed to pay IRS.

  10. househopeful Says:
    November 20th, 2014 at 01:19 am 1416446373
    1416446373

    Snafu - no, I don't have to do anything quarterly. My employer takes out taxes each paycheck for regular pay and overtime, so I don't have to worry at all.

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