I’m just trying to make sure I’m understanding this correctly. So I’ve made $26,466.93 in overtime hours so far this year but some of that is double time. When you break it down to the premiums only I’m at $5,470.54 half time and $5,094.56 double time. All of this is in excess of 40 hours a week, so my qualifying overtime would be $8,017.82 as it stands today under the new tax rules?
Am I understanding the new tax rules correctly?
byu/Responsible_Knee7632 intax
Posted by Responsible_Knee7632
4 Comments
It’s probably less than that.
The qualifying overtime pay is only overtime as required by federal law.
If your union contract or company policy provides for overtime in non-legally-mandated situations, that money is not “qualified overtime”.
Examples of potentially non-qualified overtime include: holiday premium pay, minimum show up pay for after-hours emergency call-back, fatigue time, overtime earned in the same week as vacation or sick leave, shift differential overtime, overtime paid to airline or railroad workers, etc.
If you’re thinking “this tax cut isn’t as good as advertised” – you’re right.
I agree that you seem to have done your math the right way.
If you have made less than $95,375 and are single, you should get a tax rebate of $1,763.88 on the overtime you have worked so far, because the marginal tax rate for $44,725 to $95,375 is 22%. If you made up to $182,100, the tax rate is 24% for the income between $95,375 and $182,100, so you would get another 2% back on those taxes.
Your employer will send you something that states your premium, and that is required to claim the deduction
For simple terms, it is the .5 in the 1.5 of overtime pay.