Personal Finance

Working overtime is it worth it????????

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  • Jul 5th, 2010 2:44 pm
Newbie
Nov 29, 2008
64 posts
1 upvote

Working overtime is it worth it????????

Hi i was just wondering is working overtime worth the extra tax we pay?


Everyone at work thinks i am crazy to worth the overtime that I do. They always tell me that its not worth the extra tax.


Do i get taxed more on my overtime work.


Thanks for your help tried to search but couldnt find anything.
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Mar 23, 2004
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i work overtime and i dont get paid for it...so to me, it's not worth it. But i have to get my job done, so yeah.
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Oct 26, 2009
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Extra cash is extra cash.

How much will you make if you don't work overtime?
[OP]
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Nov 29, 2008
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muchacho_007 wrote:
Jan 1st, 2010 10:20 pm
Extra cash is extra cash.

How much will you make if you don't work overtime?
Thats my thinking but they seem to try to convince me that i am getting killed in the taxes. The opportunity cost of sacrificing my extra time to get taxed even more is the point they are trying to make.


But if i put everthing in my RRSP that i worked in overtime i think its worth it.
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Oct 26, 2009
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dantheman7 wrote:
Jan 1st, 2010 10:25 pm
Thats my thinking but they seem to try to convince me that i am getting killed in the taxes. The opportunity cost of sacrificing my extra time to get taxed even more is the point they are trying to make.


But if i put everthing in my RRSP that i worked in overtime i think its worth it.
You can put everything in your RRSP if your employer can manage it.

Now regarding the taxes, like I said, what is the opportunity cost of doing nothing? How much do you gain by not working overtime? Usually, depending on how you are taxed, the 1.5x or 2.0x rate that you are paid for working overtime covers the tax portion so that you end up making just a bit more than your regular hourly rate. Your tax return will be sweet though.
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Aug 18, 2005
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Depending on the amount of your base pay, you MAY be getting taxed at a higher rate on the overtime work.

Other thing to note is that depending on how your paycheque is calculated, they might excessively tax you because their software assumes you are working that much overtime on every pay period through extrapolation. Even if this is the case, you will get it all back come tax return time.

(Although some would argue, in Canada the best strategy is to be poor because you get socical benefits and pay no taxes. Work harder! Poor people are counting on you! :lol: )
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Dec 28, 2006
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dantheman7 wrote:
Jan 1st, 2010 10:14 pm
Hi i was just wondering is working overtime worth the extra tax we pay?


Everyone at work thinks i am crazy to worth the overtime that I do. They always tell me that its not worth the extra tax.


Do i get taxed more on my overtime work.

What "extra" tax?


Person A makes $60,000/yr all salary.

Person B makes $40,000/yr + $20,000 in overtime.


Assuming all other factors are equal, guess who pays more in income tax?


Neither. They both pay the same.


Person C makes $60,000 + $20,000 in OT. Guess who ( A, B, or C) takes home more money?


Earning more money may mean paying more tax than you would without the overtime, it also means taking home more money too. And if you are putting all your OT into your RRSP you are paying no income tax on that money until you withdraw it.
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May 30, 2005
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ghostryder wrote:
Jan 1st, 2010 11:08 pm
What "extra" tax?


Person A makes $60,000/yr all salary.

Person B makes $40,000/yr + $20,000 in overtime.


Assuming all other factors are equal, guess who pays more in income tax?


Neither. They both pay the same.


Person C makes $60,000 + $20,000 in OT. Guess who ( A, B, or C) takes home more money?


Earning more money may mean paying more tax than you would without the overtime, it also means taking home more money too. And if you are putting all your OT into your RRSP you are paying no income tax on that money until you withdraw it.
The idea is that a higher percentage of your salary is taxed. You still get more take home salary but your 1.5X OT money may end up being 1.2X if the OT money bumps you to the next tax bracket.
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Oct 26, 2008
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If you need the extra cash then its worth it. Who doesn't need more cash these days anyways?
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angel_wing0 wrote:
Jan 1st, 2010 10:19 pm
i work overtime and i dont get paid for it...so to me, it's not worth it. But i have to get my job done, so yeah.
Your employment here at RFD is appreciated. :lol:
[OP]
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Nov 29, 2008
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Trooper8111 wrote:
Jan 1st, 2010 11:51 pm
Many public employees take it as time-owed.
I have the option of banking the time to take time off but the money to me seems more usefull. If i was to take time off i would be just spending more money instead.


I work more to make more $$$$ and stay out of trouble :D
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Jul 1, 2007
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This discussion is about as stupid as "why would I want to earn interest on my savings if I have to pay so much in extra taxes?"
Trooper8111 wrote:
Jan 1st, 2010 11:51 pm
Many public employees take it as time-owed.
Do public employees work over-time... ever?
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May 31, 2007
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Jon Lai wrote:
Jan 1st, 2010 11:16 pm
The idea is that a higher percentage of your salary is taxed. You still get more take home salary but your 1.5X OT money may end up being 1.2X if the OT money bumps you to the next tax bracket.
But this evens out when you file your taxes. Like the other poster said, 60k is taxed the same as 40k + 20K overtime.

The problem is in how the employer calculates taking income tax off. It takes your bi-weekly net pay, multiplies it by 26 (one year of pay), and uses the marginal tax rate. This is not accurate, but they can't guess exactly how much your end of year pay will be, for tax purposes. So, you pay more tax up front, because it calculates your doing the same for an entire year, per every pay cheque.


I think the question should be, "is it worth working overtime for receiving less money up front, when I have to wait for my taxes to be filed, to get it back."

Or

"Is your time or life worth working excessive hours, to make more money"

Yes and no for me. Anything over 12 hours OT, I want my life back.
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Oct 15, 2007
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Jon Lai wrote:
Jan 1st, 2010 11:16 pm
The idea is that a higher percentage of your salary is taxed. You still get more take home salary but your 1.5X OT money may end up being 1.2X if the OT money bumps you to the next tax bracket.
no matter what we all get taxed on what we earn, the more you earn, the more you get taxed, its just that simple

if you are on the bubble of the next tax bracket then you may end up netting less than if you did not work the extra hours

op needs to give more financial info to determine whether or not the extra overtime wage will end up all going to taxes
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