Nurses targets for IRS?

OC_An Khe · Mar 16, 2007

Why not work the OT? So they take out 40% in taxes... that still leaves you 60% AHEAD (more cash in your pocket) then if you didn't work the OT. As for sick time it is income like any other and is subject to fed income tax,fica, medicare, state income tax and (shudder) in some places city income tax.

Ariesbsn · Mar 16, 2007

WhimsieRN,

wow... I thought I was imagining things when my employer took out FORTY percent taxes on my OT and on my sick time!
I will never understnad that and after figuring that out, I don't work overtimes either.

I had the same thing happen to me. Unless I work five 12 hour shifts of over-time, I take home less per over-time shift than I do if I work straight time. It is really discouraging and I won't work over-time either.

What happens is that your regular earnings have you near the end of your tax brackett and when you work over-time, your earnings for that time period put you into a higher tax bracket. Part of the payroll process is based, in part, on how often you get paid. There is a schedule from the IRS that is page after page of how much to tax a person's wages if they get paid daily, weekly, every two weeks, and so on. This information is incorporated into the software used for payroll.

Where the problem comes in is that these schedules annualize your wages each pay period. The assumption is made that what you make for that pay period, you will have made and will make for every pay period in the year. Providing that you don't work a bunch of over-time and that you get a refund, you do get the money back come tax time. However, it is really disheartening to work a 12 hour shift of overtime and take home $10.00 less than you would if you worked straight time. Then, when you do the math and realize that you lost 56% of your over-time pay to taxes, it is infuriating.

weirdRN, RN · Mar 17, 2007

EXACTLY! My take home was LESS than it would have been for straight time.... No more OT for me.

Hmmm Do you think if the gov't would give nurses some sort of tax break on OT that we wouldn't have such a shortage?

Myxel67 · Mar 17, 2007

wow... i thought i was imagining things when my employer took out forty percent taxes on my ot and on my sick time!
i will never understnad that and after figuring that out, i don't work overtimes either.

fica withholding from your paycheck is not the same as the amount of taxes you owe. as ariesbsn said, the employer follows a schedule and withholds an amount based on your earnings and the number of exemptions you claim on form w-4. you don't calculate your actual tax liability until you complete your federal tax return for the year. if the irs withheld too much, you get a refund. if they withheld too little, you owe them money. some people like to get a big tax refund every year. i prefer not to give uncle sam an interest free loan, so i try to estimate tax liability and adjust w-4 exemptions by filing a new w-4 so that i end up with about a $75 tax refund. (on form w-4 you claim single or married taxpayer status and estimate the number of exemptions you have--married with 2 dependents, or married with 6 exemptions, etc. the more exemptions you claim, the less money withheld from earnings.

what really hurts is if your earnings are high enough to trigger the alternative minimum tax. this was a rule set up in the 1960's to make sure the "rich" didn't pay very little tax because of large itemized deductions. the problem is that the earnings limit wasn't tied to inflation, so now the amt hits a lot of middle income americans. according to a news report i heard recently, the amt kicks in for an individual at about $75,000 and at about $150,000 for married couples. if you hit the amt rules, your tax liability is calculated without your itemized deductions. this is compared to tax liability calculated using itemized deductions, and you pay the higher of the two. people have ended up owing $10,000 or more to irs.

what can you do to prevent it? take advantage of 503(b) plans and 401(k) plans where retirement savings can reduce reportable income. also use the child care flex plan and health care flex plan if eligible because these also reduce reportable income. if you are 50 or older, you are also eligible to make 401(k) catchup contributions of up to $5,000 a year. (of course all of this assumes you have the extra money to save in these tax defferal plans.)

weirdRN, RN · Mar 17, 2007

Okay, we are obviously not understanding MY point.

More taxes are taken out when I work OT.

I already have my W-4 set to withhold the max amount.

I got very little back this year.

I end up making LESS for OT shifts than I make for straight time.

I picked up extra shifts and got paid LESS than if I had just stayed home or not worked a double.

dawngloves, BSN, RN · Mar 17, 2007

Okay, we are obviously not understanding MY point.
More taxes are taken out when I work OT.
I already have my W-4 set to withhold the max amount.
I got very little back this year.
I end up making LESS for OT shifts than I make for straight time.
I picked up extra shifts and got paid LESS than if I had just stayed home or not worked a double.

But if it put you in that higher tax bracket for only say, four paychecks a year, and the other paychecks you were in the lower bracket, you will get that money refunded at the end of the year as your average will leave you in the lower bracket.

dream'n, BSN, RN · Mar 17, 2007

I hate tax-filing time. Hate, hate, hate it. It takes hours to complete the forms, and I have many WTH moments. The forms are difficult to understand sometimes and then you need to possibly add this or that form too. I always get ticked with them. Personally I think since the government requires every single citizen to file, they have a responsibility to make the process easy to use and understand. The penalities for filing wrong can be enormous, and that only adds to the frustation. This year I went to a tax professional, but was not happy that I now have to pay money out of my pocket to complete these tax forms, because the people in Washington can't simplify things. I am all for a flat tax. A flat tax would make it so simple. Everyone pays x% of what they earn, no deductions, etc. Just a simple, across the board set %, that would be fair.

Sheri257 · Mar 17, 2007

You used an accountant to prepare your taxes? If you did, then there is your recourse.
You paid him to do a job, and he didn't do it. He carries E&O insurance to cover your losses. If he is a seasonal tax preparer, he works under a CPA...if he IS a CPA, then I would demand to know who his E&O carrier is and file a claim.

Yeah ... this is the reason I gave up on accountants years ago. I figured I couldn't do any worse if I did my taxes on my own.

When I went through an IRS audit, the auditor pointed out all of the mistakes the accountant made. I've been doing my own taxes ever since ... and haven't been audited since then either.

:typing

Sheri257 · Mar 17, 2007

But if it put you in that higher tax bracket for only say, four paychecks a year, and the other paychecks you were in the lower bracket, you will get that money refunded at the end of the year as your average will leave you in the lower bracket.

This is true. What people don't understand is that the higher OT is taxed as if you're in that higher tax bracket for the entire year. And, sometimes you are if you work OT all the time but, if you don't, then you do get some of that tax money back.

:typing

CritterLover, BSN, RN · Mar 17, 2007

this is true. what people don't understand is that the higher ot is taxed as if you're in that higher tax bracket for the entire year. and, sometimes you are if you work ot all the time but, if you don't, then you do get some of that tax money back.
:typing

i tell my coworkers this all the time. when you file your taxes, it makes no distinction between "regular hours" and "overtime hours."

when i tell them they get that money back when the file, most tell me "well i never get money back at all anyway, so i won't." well, then you'll owe less additional tax, since you have overpaid some.

weirdRN, RN · Mar 18, 2007

I took a course in tax prep years ago. I don't think the Federal tax process is all that hard if you just follow directions. I haven't ever been audited so far, but if I should be I have all my ducks in a row and all my paperwork in triplicate.

State taxes on the other hand drive me BONKERS.

I shouldn't complain I suppose, someone's tax money made it possible for me to get grants and partially helped support me when I was in school. Taxes help do a lot of GOOD things. It's just I see so many people who could put forth the same effort I did and do more than they do with their lives. They have so much potential and they waste it.

I don't mind helping when people are down, but to put yourself on the floor and stay there because you are just lazy or because you believe that SOMEONE owes YOU is just WRONG.

lauras25911 · Mar 20, 2007

That is unbelievable...the things that the IRS does!!!! And how in God's name are you supposed to fight the government?

Unbelievable.

I hope you get everything straightened out. Wow, what a nightmare.