Do you pay more tax on your overtime?

Many people think you pay more tax on your overtime. That’s not true. Your overtime falls into the same tax bracket as your regular salary. So why does it seem like you end up with less money after working overtime? In this article, we’ll explain more about it.

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So why does it seem like you're paying more tax on overtime?

This is due to the tax credits you receive on your regular salary, such as the general tax credit and the earned income tax credit. These credits reduce the amount of tax you pay on your regular salary. You usually don’t receive these credits—or receive a smaller amount—on your overtime pay. As a result, it may seem as though more tax is being deducted. In reality, your overtime pay is taxed at the standard rate, while your regular salary receives the tax credit.

Are you eligible for a tax refund?

You may have overpaid payroll taxes. In that case, you can request a refund from the IRS through your tax return.

This happens, for example, when you:

works part-time
didn't work the entire year
have taken temporary unpaid leave
have incurred high medical expenses.

The amount you get back depends on your personal situation. Sometimes you may actually have to pay a little extra. That’s why it’s a good idea to file your tax return every year.

Do you have questions about your salary or pay stub? If so, it’s a good idea to check with your UBN contact person; that way, you’ll know exactly where you stand.

Don't work at UBN yet?

At UBN Employment Agency, you can be sure you’ll receive fair compensation for your hard work. Your benefits package is at least equal to that of a colleague in the same or Function similar Function the same company. Find your next job and start doing work you enjoy right away!

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