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Is overtime taxed at a higher rate than regular pay?
It’s important to understand how your tax implications change if you work overtime. The first thing to know is that overtime does get taxed since it’s classified as a type of income. Overtime pay gets taxed at the same rate as ordinary income and not at a higher tax rate.
Why are more taxes taken out of overtime pay?
When you work your regular hours, about the same percentage of federal and state taxes are withheld every time from your paycheck. When you work overtime, your pay will increase, so will your tax liability, which is why you will see more taxes withheld from your paycheck.
Is overtime taxed more in California?
Taxes on overtime are not different than taxes on regular wages. You will calculate and withhold taxes the same way you do for regular wages. In fact, you will withhold taxes from the combined total of overtime and regular wages. You do not separately withhold taxes from these two types of compensation.
Do I have to pay taxes on overtime?
Taxes on overtime are not different than taxes on regular wages. You will calculate and withhold taxes the same way you do for regular wages. In fact, you will withhold taxes from the combined total of overtime and regular wages. You do not separately withhold taxes from these two types of compensation.
What are the federal overtime laws?
The federal overtime provisions are contained in the Fair Labor Standards Act (FLSA). Unless exempt, employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.
Do you have to pay overtime if you work over 40?
Unless exempt, employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. There is no limit in the Act on the number of hours employees aged 16 and older may work in any workweek.
How much does Molly have to pay in taxes for overtime?
For example, Molly earned $440 without overtime. If this were all Molly earned, you would subtract $21 for federal income tax. But with overtime wages, Molly earned $522.50. The added overtime wages moved Molly up into a higher wage bracket, which means you withhold $31 for federal income tax.