Tax question

[HiTempguy1]

Lets say an individual earns around $50k per year.

Lets also say that they had a sizable paycheque (2 week pay period) with overtime that was well outside the normal amount (lets say salary plus overtime was around $10k gross).

Would 40% tax on that paycheque be reasonable? It seems excessive considering the person only earns $50k/year.

[speedog]

That check would most likely have tax deductions withheld based upon the highest income tax bracket and that employee will see everything balance out come income tax time. It's just the way the system is set up and it's got nothing to do with the payroll people being dumb or anything - yeah, it may appear excessive but that employee may very well get a few more excessive pay periods or move on to a much better paying job and certainly any payroll department or Revenue Canada can't predict these unknown variables.

That's partially why I suggest to my part-time employees who have have several jobs to consider the tax implications of very little taxes coming off of each job's pay check especially when everything is all lumped together come tax time - an extra amount coming off of each pay check could counter the implications of three part time jobs bumping one into a higher tax bracket come tax time.

[Tik-Tok]

You'll also get some money back at tax time next year.

[cet]

I assume you're talking about the deduction your employer takes off and not what you pay at the end of the year.

They way my company works with overtime is that if my cheques are higher because of overtime they assume that is the amount I make throughout the year and tax me accordingly. For example, let's say I make $50,000 per year. They tax me based on that. Now, if i work overtime and have a cheque of, say $4000. That works out to an anual salary of $104000. For that cheque, that's what they base my tax on. At the end of the year I'll get money back. You could try talking to HR and see if they will adjust your tax to be more representative of what you make in a year.

[FraserB]

Originally posted by cet
You could try talking to HR and see if they will adjust your tax to be more representative of what you make in a year.

They won't. And from my understanding they can't waive those calculations from your cheque.

I have my CPP and EI just about payed off and I'm moving to a subsidiary of my current company. My payments to EI and CPP both reset to zero and so does my year to date earnings. This is despite the fact they use the same payroll department.

You'll just get a bit more back at tax time.

[lasimmon]

At a previous job I had my Salary was $42,000 a year with a job bonus, but by year end I would have made ~$140,000.

Lets just say it was always a guessing game as to what the tax would be depending if I had just straight salary on the cheque or job bonus's as well.

[Sugarphreak]

...

[FraserB]

Some what related question.

On the T4 slip, is tax exempt income broken out on its own line or does it have to be manually input when I prepare my return?