No Tax on Overtime & Tips - I Hope I'm Wrong [View all]
If I’m reading this correctly the ‘No tax on Overtime and Tips” provision of the Big Bastards Bill (BBB) is going to have a serious consequence for peoples retirements.
Currently Social Security and SS Disability is based on earnings. That means you pay SS tax on your gross earnings and the 35 top years earnings is then set to determine your retirement benefit. So as I see it if income is not taxed, it’s not counted. Am I thinking right?
So if you work a 40 hr a week job and are doing an average of ten hours a week of OT (which at time and a half is like 15 hours of base pay) over the course of a year you’d “not” earn over 700 hours of pay (as far as the government is concerned). Because you’re not taxed on that money your annual pay is lower and that in return lowers what you’ll get for Social Security.
Am I thinking of this correctly? Or do they still plan to collect SS on the overtime and declared tips? I honestly don’t know. Anyone have an answer?
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