Overtime vs. 2nd Job

[Righteous]

Hey all, I've recently started working overtime and I got my first check. Uncle Sam basically had his way with me and I was wondering if I would make more money just getting a 2nd job that pays the same.

I've never really looked at my paycheck <yes I realize how stupid that is> and just looked at my net pay and went planned from there. I'm still going to work 2 solid weeks with no vacation just to see how it pans out and calculate from there.

I'm also looking at how my paycheck is calculated so I can understand just how much the government is gouging.

I think at my current rate I could actually break into the next tax bracket. I'm not entirely sure what that means but a quick google search shows $91,150.00 to be the next level. Do I want to avoid this at all costs?

No wonder why I'm so broke. Never even bothered to understand how and what money I'm due. You older people had less taxes coming out of your check, I assume. Has the gross pay and net pay ever been the same?

TL;DR: Will I make more money working nonstop (with overtime) at my current job or working the same amount of hours at a 2nd job with the same base pay. The only reason I'm questioning is because of the taxes.

And

Do I need to avoid the next tier of the Tax Bracket? Or is the extra amount I'd be taxed negligible?

Really makes you look at working in other countries though.

 

[gonefishing]

Hey all, I've recently started working overtime and I got my first check. Uncle Sam basically had his way with me and I was wondering if I would make more money just getting a 2nd job that pays the same.

I've never really looked at my paycheck <yes I realize how stupid that is> and just looked at my net pay and went planned from there. I'm still going to work 2 solid weeks with no vacation just to see how it pans out and calculate from there.

I'm also looking at how my paycheck is calculated so I can understand just how much the government is gouging.

I think at my current rate I could actually break into the next tax bracket. I'm not entirely sure what that means but a quick google search shows $91,150.00 to be the next level. Do I want to avoid this at all costs?

No wonder why I'm so broke. Never even bothered to understand how and what money I'm due. You older people had less taxes coming out of your check, I assume. Has the gross pay and net pay ever been the same?

TL;DR: Will I make more money working nonstop (with overtime) at my current job or working the same amount of hours at a 2nd job with the same base pay. The only reason I'm questioning is because of the taxes.

And

Do I need to avoid the next tier of the Tax Bracket? Or is the extra amount I'd be taxed negligible?

Really makes you look at working in other countries though.

If your lucky you don't have a company that has a no moonlighting policy.
I know one kid an EMT working at a company that has a no moonlighting policy working at McDonalds on the side.
That aside, you should be fine with your taxes but im no CPA lol

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[TransportJockey]

This is one reason I'm glad I live and work in Texas. No state income tax coming out of my paychecks. But yes, the more OT you work you will reach a point where you pay more in taxes than you take home from your OT rate. I know for me, that number is somewhere near 30 hours of additional OT a pay period (we get 16 hours built in because of our shift schedule)

 

[cprted]

Whether you make the money at a second job or by working OT, it is still going to be taxed.

And the whole "avoiding the next tax bracket" isn't how taxes work. Lets say you make $75k and are taxed 20%, and the next tax bracket starts at $80 at a rate of 24%. If you make $81k your entire income isn't taxed at the new rate. Only the income above $80k is taxed at 24%, the income under $80k is taxed at the 20% rate.

 

[chaz90]

In reality, you have to be careful to withhold enough from your second job so you don't get reamed when you file your taxes. If you make 60K at your primary job and 20K at your second, you may inadvertently pay far too little taxes on your 20K extra employment as they tax it like it is your only income. That can make for a rough tax season if you suddenly owe the IRS an additional 5K.

 

[Underoath87]

Overall, I don't think it matters whether the income comes from OT or a second job, as you just pay taxes on your total yearly income. If you get taxed higher on each paycheck for OT, you'll get a better refund than if you had worked two jobs.

Edit: Chaz already explained this. Deductions and refunds notwithstanding, it's all the same in the long run.

 

[gotbeerz001]

OT often pays more. [emoji482]


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[mgr22]

The simple answer is, the more money you make, the more you keep. Your withholding will go up as you make more, and you might have to decide whether it's worth working more hours for reduced hourly take-home pay if you enter a higher bracket, but the IRS isn't going to tax you more than you make.

I've had this discussion with many coworkers who believe they lose money when they enter a higher tax bracket. That's not how taxes work.

One thing you can do to possibly increase your take-home pay is consider having less withheld if you expect a significant refund. Why lend the government money for free? So many people seem to think big refunds are gifts, but they're simply your money being returned to you late, without interest.

 

[akflightmedic]

MGR22...finally someone says it!! LOL.

I always get a kick out of people who say they got a refund and got all excited!! Like it was some freebie from the government. Ummm, no dude/dudette, you just loaned out YOUR money to the government interest free! During that time period, that money could be in your pocket earning interest or allowing you to find other ways to grow it, but instead you let it sit somewhere where it does not even earn a single percent!! Ugh.

Ending up owing nothing and receiving nothing is perfect, but if you owe that is better. Save your money and plan for it, the hit is not that bad. However, when I said this to people, they were like "well its good they take it, cause I would spend it"...in that case, yeh you just need to adult better and be financially smarter!

Anyways, you are "so broke" because you probably like many live above your means and simply are not sure how the whole want versus need thing works. If you are young and single, absolutely zero reason you cannot pump the account full! I get it, once life starts to happen it becomes more challenging, not impossible but certainly challenging. Been there, done that.

You definitely should continue to educate yourself on all these taxes, income and how to manage your OT. Either way, OT or second job end result is same on tax paper. Commitment wise is different story. A second job may have minimum mandatory requirement. With OT, usually unless mandated, you can pick and choose when you work. However, burnout can ensue. With a second job, you have a different environment, different people to recharge your spirit.

Decisions, decisions....

 

[gonefishing]

Theres a few people I know that due to moonlighting rules, they said screw it and went full on public assistance from medical insurance to food stamps and moving into low income government housing.

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[akflightmedic]

There once was a time when I qualified for govt assistance on my county EMS salary...I was young with wife and kids. I always worked my *** off on OT keeping our head above water. My wife had stopped working cause it was cheaper than try to pay for childcare (ironic right) but then I was busting hump covering the slack.

So I went to apply and they told me to bring my past two stubs which I did. They looked ta it and said I earned too much money!!! I said thats because of OT and it is clearly line itemed and you can see that. They said sorry, no can do. You need to bring us two stubs with NO OT and then we can process you.

SO basically even though they could see my basic salary and they knew I was working OT to NOT need THEM, the only way to get help was to not do OT for over a month to qualify. I flat out asked them...you want me to stop all OT, all extra jobs....which is going to put me in a much deeper hole than I am now, but once I do then I can have help??? They said YES!!

ARRRR>>>>>>>It was so frustrating! I have way too much pride to ever do that. I left with no assistance and just kept pushing on. All I wanted was some damn food and diaper help for a few months cause the kids were so expensive, was not looking to make a career out of it and certainly was not willing to intentionally "hurt" us in order to help us. Very stupid system. Anyways, just a side story not relevant I guess, but those years are long gone.

 

[Carlos Danger]

You definitely should continue to educate yourself on all these taxes, income and how to manage your OT.

I'll never understand why this stuff and personal finance isn't taught in schools. I'm 41 and pretty well educated, but still just now having to teach myself stuff I should have never have been allowed to graduate high school not knowing.

 

[akflightmedic]

Oh man I agree 100%!!!! If I had the power, I would totally revamp high school and implement courses which prepare you for LIFE!!!

Kids graduating with no idea on how taxes work, no clue how to complete a W-4 when hired, know idea how to write a check or balance a checkbook...yes, it is still a necessary skill!! How to buy a car and shop for interest rates and how those can impact you and why a percent DOES matter. It is pure silliness on the things we do NOT teach them. I could go on and on...

 

[Akulahawk]

Something I noted was said but NOT expanded upon was deductions. Sure, the more you make, the more you keep but you also have more to pay in taxes too. In addition to paying attention to your withholdings so that you're very close to zero tax liability (if you're within about $200 either way, you've figured your tax withholdings just about right) you also must pay close attention to any and all tax deductions as well. Because I paid such close attention to my tax situation (income, withholidings, deductions, etc), for the better part of the last 10 years I was able to reduce my withholdings to essentially zero and my wife's to close to the same so we were receiving nearly our full salary minus a couple taxes that can't be reduced (like social security, disability, etc). In addition to this, we paid such close attention, we also qualified for "refundable" tax deductions which meant we actually received a tax refund that was greater than what we would have owed.

Granted, we were making about $42k/year (at the time) and had deductions that usually reduced our taxable income to below $18,000... so pay very close attention to those deductions and programs that you may qualify for!

 

[epipusher]

Agree, seems like a W4 adjustment is needed.