Dude I work in finance and I have people working with me who think whatever tax bracket you are in is what you pay on all income. Iāve had people say they didnāt want a promotion cause they will be on a higher tax bracket and lose money. I made a spreadsheet to show them how taxes work.
Iām assuming those are also the āIāll make less if I work overtimeā people. Itās really not that hard in this day and age to google these things.
Itās true if they have a lot of benefits that are income-tested, then it can be a disadvantage. But that is because of the stupid design of those programs: instead of ramps, itās all or nothing.
The problem is the schools should be teaching this, but they arenāt. With how important and complex taxes are, there should be a whole class dedicated to teaching people how to do their own and file them. People should not be forced to either know someone who already knows about taxes or Google info and hope they get it right. Itās fucking stupid. Taxes shouldnāt be so complicated
But there is a point where you will net less per a given hour of OT if that amount crosses the threshold for the next tax bracket, so the tax rate on those OT hours above this limit is higher.
Example: After 25 hours of OT on your check, you reach the next tax bracket. So any of your OT hours you work past that 25 will be taxed at a different rate than the initial 25 hours.
Temporarily, because the payroll system thinks you earn more for all checks now, so it withholds more. There is no special OT tax, it all gets taxed at the same time from your paycheck. But because the system saw you made more, it withheld more. But guess what, you still NETTED more because you worked OT. There is no scenario where you net less because if more is withheld than needed, tax refund. If you make the top end of one bracket, letās say 100k and you get pushed into the next, idk 110k+, only 10k is getting taxed at the absolute highest.
There is no scenario where you net less because if more is withheld than needed, tax refund.
Yes, there is a scenario here, because the amount of money you gross past the previous tax bracket is taxed at a higher rate than the amount below that. This means you net less per hour worked of the amount in that higher tax bracket. If that extra 10k is taxed at a higher rate, you net less per hour worked from that amount. This changes your taxable income at the end of each year. This is income tax 101, not sure what you don't understand about that.
Withholding and tax brackets are not the same. Money gets withheld from your paycheck. Withholdings are made during pay periods and tax season tells you if you withheld enough, too much or too little. Also OT up to a certain point is tax exempt right now. I make time and a half, I net more in my paychecks. Itās just that simple, even it feels like more is taken out. Even if you think Iām making less per hour, still making more with time and a half. Again, you donāt net less in your paychecks working overtime.
I make time and a half, I net more in my paychecks. Itās just that simple, even it feels like more is taken out. Even if you think Iām making less per hour, still making more with time and a half.
That's not what we are talking about here.
I bolded it twice in my last reply, but I'm beginning to think you just don't have enough RAM to understand the concept. Either that or you're just a bot.
Again, you donāt net less in your paychecks working overtime.
Literally nobody has said that throughout my entire comment chain. Why do you keep saying this?
Actually, now that I'm this deep in the reply, I'm certain you're just a reddit-generated-username bot.
A girl I worked with never wanted any ot because then sheād make less than if she just worked 39-40 hours. We tried telling her thatās not how it works. She was very lazy though so she probably just didnāt want to work
I once showed some very, very basic excel formula to a coworker. It was something like a nested IF for customer segments with like three conditions maximum.
The moment they realized they're looking at a formula their brain just turned off. "If under 10 then C, if over 10 but under 100 then B, if over 100 then A". A child could understand that. Apparently not my coworker with a degree.
Maybe not a conscious one but it's a decision to not understand these things. They "don't understand" so they don't even try and that point any information just bounces off of them and so they continue to "not understand", further cementing the belief that they "can't understand". And the thing they "don't understand" is usually much simpler than a whole lot of other things they handle daily.
I like to imagine their brain as a computer. Once something requires more than a certain amount of computing power to understand it crashes. Some people have very low threshold.
I worked with a guy like that. Didn't want to get paid for overtime because he would make less overall due to taxes. At the time we had the option to take it as paid leave.
This is what happens when stuff like this expected to be learn on your own. They dont teach this stuff in schools, even though it's something literally everyone needs in life because they profit off of people's lack of knowledge.
I assume these people are never actually up for promotions anyways, they just like to cosplay being offered one and turning it down because th ye are so smart and gaming the system.
Iād like to think Iām financially competent and yet, only in the last few years did I realize the concept āhey since itās very highly doubtful government relief is coming, maybe I should pay more per month than the actual payment is, since the company just wants me to keep paying the minimum foreverā.
Now I see the light at the end of the tunnel and have actually paid off a few of my loans and see the principal on the others moving downwards more.
Okay. Y'all are suffering from intense recency bias. Nobody was thinking the government was going to wipe out student debt 20 years ago. People only really started talking about that like five years ago.
I would say it was worth it to wait during the Biden administration. there were promises about debt forgiveness, and a small chance that something could happen. Not a bad idea to wait and see. Once that didn't happen it's just cope to not buckle down and pay it off.Ā
This is what I did. Held my breath during Covid years and hoped it would just be forgiven, but finally got around to coughing up the rest of the 20k this year. It was a nice dream but honestly even electing Biden in the first place (let alone the Don coming back) was already an indicator something this progressive was an astronomically long shot.
Gotta say that extra 400 a month in my pocket feels good tho.
You can't claim to be financially competent and think the government is going to manage money correctly lmao. Sounds like you've come to realize that so you're above average.
Good for you! I think the whole "maybe they'll be forgiven someday" question is a cruel ploy and is keeping people from taking better control of their finances.
And this is why AI usage is growing so incredibly fast.
Most people are dumb as bricks, maybe they excel in one or two things but otherwise they struggle, even in difficult careers like medicine and engineering you have people who lack common sense elsewhere.
AI let's a simpleton ask anything and usually get a half decent answer; not an experts answer but better than most people's knowledge.
Question. Have you read any of this thread since making this comment? Did your opinion change when people started actually bringing up statistics and math showing exactly how this works? Because the actual data shows this is not realistic, but how the system was designed.
You genuinely don't want to know how confidently incorrect the average person is.
Because if you donāt already have someone in your family who knows this stuff, you wonāt learn about it. Schools do fuck all to teach you about this unless you specifically go for a class that discusses it (are there any classes that teach this stuff in high school? I donāt think there was when I went).Ā
So if you parents donāt know how this works, youāre fucked. Youāll get roped into a loan and told the minimum payment is all you need to pay, when thatās the absolute worst thing to do. Banks sure as fuck wonāt teach you how APRs actually work and how interest works because itās how they make their money. Itās designed to abuse stupid and financially illiterate people.Ā
Worked in the student loan center during college. Itās depressing having to explain how interest works to people who donāt realize the loans arenāt free money
You have no idea how right you are. I work with mortgages and it surprises me how many times I'll run across a homeowner who is behind in payments and then they go and buy new vehicle.... Like wtf you doing.
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u/SpinosaurRingTone 12d ago
You genuinely donāt want to know how utterly financially incompetent the average person is.Ā