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View Diary: Do YOU understand how tax brackets work??? (124 comments)

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  •  here's another one lots of folks don't get: (3+ / 0-)
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    tommymet, glitterlust, Brainwrap

    I'm a nurse, and it's endemic to our work that the size of your paycheck varies a lot from pay period to pay period.  You get called off when workload is low and offered opportunities to work extra when things are busy - sometimes at premium rates.  The payroll software is programmed to treat each pay period for tax purposes as if that was going to be the normal pay period for the year.  So when you work a lot of hours, make a bunch of overtime, the program assumes that you are going to be in a very high marginal bracket and withholds taxes accordingly.  Seeing the big tax bite, people commonly say: "It wasn't worth working extra, I lost it all in taxes."  But in reality the only thing that counts in the long run is your total income for the year, and you will, in general get back the money you paid for those times when you were overtaxed.  But folks seem to have a hard time getting their head around that - and then just the whole immediate vs deferred gratification thing operates too.

    "Wouldn't you rather vote for what you want and not get it than vote for what you don't want - and get it?" Eugene Debs. "Le courage, c'est de chercher la verite et de la dire" Jean Jaures

    by Chico David RN on Mon Nov 19, 2012 at 10:15:45 PM PST

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