Personal Finance

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

  • Last Updated:
  • Jul 5th, 2010 2:44 pm
Sr. Member
May 5, 2006
991 posts
474 upvotes
The only time that making more money can cost you is the provincial health premiums.

For example, if you made $48,199 of taxable income and got $2 of overtime (taxable), you would end up paying $25 bucks more for the next step up of the health premium.

Rare... but it happened to me! My employer gave me an 'award' (not even cash, a gift card LOL) that was taxable and it put me over -eyeroll-.

http://www.rev.gov.on.ca/en/tax/healthp ... rates.html
Deal Expert
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Nov 15, 2004
21786 posts
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Toronto
Red_Army wrote: you are missing my point...if you are on the bubble of any tax bracket, then you actually end up netting less money, if your overtime bumps you into the next bracket
No, you're not. You might get a few dollars less than you think on your paycheque because of the way they're calculated by your employer, but you'll get it all back on your tax return. Hence, you're still being taxed the lower rate on the money you make within the lower tax bracket, and the higher rate only on the money you make within the higher bracket. You won't lose money by working overtime.
Deal Addict
Jan 28, 2009
2013 posts
613 upvotes
Calgary
Red_Army wrote: you are missing my point...if you are on the bubble of any tax bracket, then you actually end up netting less money, if your overtime bumps you into the next bracket
you are incorrect. Your tax rate is marginal, so you would only pay tax at a higher rate on the amount you earned in that bracket.
Deal Guru
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Mar 1, 2004
12861 posts
1485 upvotes
Pickering
When I was making 36K, I worked enough OT to make $50K. When I was making $44k I worked enough OT to make $64K. I put as much as I could into RRSPs and LSIFs and took my refund and put that towards next years RRSPs and LSIFs.

I did not mind waiting until the end of the year to get my money, because the other option is to whine and not get the money at all.

From my point of view, if you can handle it, it is worth it. You won't always be able to do it because of lifestyle changes, or later on the option might not be available (like now with the economy).

If you ever got laid off or similar, you would be kicking your own ass for not taking advantage when you could have.

Like mom says" Make hay while the sun shines".

A lot of the people who push the lore about working OT isn't worth any extra money usually say RRSPs are invaluable as well. They choose to do nothing and shoot down the rest of us who are trying to make a buck and get ahead.
Deal Addict
Feb 4, 2008
3137 posts
179 upvotes
Thalo wrote: 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?"



Do public employees work over-time... ever?
I know public employees with a base rate of $70K who made $100K with overtime.
Do your mortgage math correctly!
Newbie
Mar 23, 2008
18 posts
2 upvotes
Don't knock the public service:
http://www.fin.gov.on.ca/en/publication ... sure/2009/

There's TTC station collectors making ohttp://www.fin.gov.on.ca/en/publications/salar ... 09.htmlver 100k with their overtime:

Since we're in a marginal tax rate system, you won't lose money going overtime as stated, but you will have the opportunity cost of not getting the money withheld by the government right away. But more money is better in the end, do it if you have no other obligations. It really comes down to the marginal benefit of each labour hour vs. the valuation of each leisure hour you want. If I could work overtime I totally would...actually I do overtime sometimes but since I'm salaried...yeah...
Deal Fanatic
May 31, 2007
5018 posts
2175 upvotes
You can also use your higher marginal tax rate to your benefit:

More return on money borrowed for investments.
More money back on RRSP's invested.
Member
User avatar
Apr 23, 2008
451 posts
Edmonton, Alberta
Depriving yourself of extra income so you can ensure the government receives less money? I've never heard anything more silly. Work your overtime hours and buy your friends a calculator - X - 0.4(X) is still greater than 0.
Deal Addict
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Apr 29, 2002
3855 posts
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Mississauga
Red_Army wrote: you are missing my point...if you are on the bubble of any tax bracket, then you actually end up netting less money, if your overtime bumps you into the next bracket
As a few other have noted, you're incorrect. If you check your income tax forms, it should be more clear.

Unrelated side note: about 26-27 TTC union collectors made over $100k with overtime last year, Nothing wrong with the public service! ;)
Deal Addict
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Apr 14, 2005
1698 posts
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Red_Army wrote: you are missing my point...if you are on the bubble of any tax bracket, then you actually end up netting less money, if your overtime bumps you into the next bracket
I don't think you understand how taxes work - our "brackets" don't work like that.
Newbie
Feb 9, 2008
57 posts
20 upvotes
Red_Army wrote: you are missing my point...if you are on the bubble of any tax bracket, then you actually end up netting less money, if your overtime bumps you into the next bracket
Maybe you are trying to say that by working overtime you are paying an extra 7% in tax than you would be if you didn't. :confused:

For 2009 you pay 15% on 40726 and 22% after, federally, that is.

40, 726 x 0.15 = 6108.9 to Flaherty.

41, 726 - 40726 x 0.22 + 6109= 6329 to Flaherty

By earning an extra grand you pay an extra 70 bucks than you would be if you were still in the lower bracket, but you have an extra 780 bucks than your coworkers to browse RFD with :D
Deal Addict
May 3, 2006
2505 posts
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Milton
red_army wrote: 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
wrong wrong wrong
Deal Addict
May 3, 2006
2505 posts
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Milton
Red_Army wrote: you are missing my point...if you are on the bubble of any tax bracket, then you actually end up netting less money, if your overtime bumps you into the next bracket
still wrong!!!!!!!!!!!!!!!!!!!!!!!!!
Deal Expert
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Nov 15, 2004
21786 posts
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Toronto
chincer wrote: Maybe you are trying to say that by working overtime you are paying an extra 7% in tax than you would be if you didn't. :confused:

For 2009 you pay 15% on 40726 and 22% after, federally, that is.

40, 726 x 0.15 = 6108.9 to Flaherty.

41, 726 - 40726 x 0.22 + 6109= 6329 to Flaherty

By earning an extra grand you pay an extra 70 bucks than you would be if you were still in the lower bracket, but you have an extra 780 bucks than your coworkers to browse RFD with :D
Shouldn't that be (41, 726 - 40726) x 0.22 + 6109= 6329 ?
Deal Addict
Dec 8, 2008
1887 posts
225 upvotes
GTA
i would put it towards extra vacation days. if i work OT on weekends, for about 15 hrs (1.5 days), this translates into a bit more than 3.5 days vacay.
Deal Expert
Aug 2, 2001
18945 posts
10527 upvotes
I personally always try to have my OT payed out. We have a policy where we are supposed to take it as time off, but for all the years I have been there if money is leftover at the end of the fiscal year we are able to ask for a payout.

I think one of the reasons I am amongst the few that take the payout is because of the common misconception brought up in this thread, in that you lose money by going to a different tax bracket. The sad part is, many of the people who state this are supposedly educated...
Deal Guru
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Nov 18, 2005
11955 posts
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Kingston
Jucius Maximus wrote: 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.
This isn't a "software issue". It is how the gov't requires deductions to be made.
Red_Army wrote: 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
This is definitely not true. Only the incremental $ into the next bracket are taxed at that higher rate. Getting into the next bracket does not affect the tax rate on the income below that bracket.
Deal Fanatic
Jul 1, 2007
8569 posts
1763 upvotes
[QUOTE]A lot of the people who push the lore about working OT isn't worth any extra money usually say RRSPs are invaluable as well. They choose to do nothing and shoot down the rest of us who are trying to make a buck and get ahead. [/QUOTE]

These are called "socialists". They believe that everyone should get equal amount of pay for unequal amount of work (or no work at all!) and that it isn't worth making any effort at all to get ahead. Then they whine about the minimum wage being too low or when our "progressive" tax rates are made more equal (a 7% jump in MTR for income earned over $40K is ludicrous, add to that the jump in provincial MTRs, luckily I live in AB).
Deal Addict
Jul 8, 2009
2028 posts
482 upvotes
Edmonton
You only pay a higher tax rate if you move into a higher tax bracket. I've heard so many misconceptions about income tax it makes my head spin. I've actually heard people say that they don't want to make more money because they end up with less take-home pay. Move to Alberta where the highest tax rate is 39% and you only pay that if you earn more than $127K.

Simple answer to the OP's question: If you need the money and want to work more, do it. Consider the taxes to be irrelevant. It's like a previous poster, would you turn down money simply because you have to pay taxes on it?

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