Tax and other logistics of working hourly vs salary

February 19, 2008 7:12 AM

I have the opportunity to work a job that is paying $ XX /hour full time plus benefits. I've only worked salary jobs in the past, so how do I consider this compared to salary positions. My biggest concern is tax logistics, how is that factored in compared to a salary position? It's in Colorado if anyone has any input from a state tax point of view as well.
posted by anonymous to Work & Money (5 answers total)

Tax rates are the same no matter how your pay is structured. As for withholding from your paycheck, if your pay is variable from paycheck to paycheck, then your withholding will be variable. Notably, if you have a very high-paying paycheck, then your withholding might be very, very high. Withholding is calculated based on the assumption that your pay for that paycheck is your regular pay for the entire year. A big paycheck makes the withholding formula assume you're in a high tax bracket, and it withholds accordingly. When you file your tax return, everything you didn't owe is refunded to you.
posted by Dec One at 7:20 AM on February 19, 2008

yeah, the IRS doesn't care if you're paid hourly, daily, yearly, or anything else. it doesn't affect how much tax you owe, or how that amount is calculated.

as an hourly worker, you're eligible for overtime payment and salaried you're not. so, that's something positive about being hourly.
posted by misanthropicsarah at 8:45 AM on February 19, 2008

as an hourly worker, you're eligible for overtime payment and salaried you're not. so, that's something positive about being hourly.

This is not necessarily correct. What kind of work you do can also be used to determine exempt/nonexempt status, regardless of payment method.

Otherwise I can't speak to the tax aspect, but I work in a professional environment that is essentially salary, but you are paid for hours worked. If I work 50 I get paid for it. I have turned down job offers before that only offered strict salary ($XXX per week regardless of hours) becuase I think you should be paid for the hours worked.
posted by Big_B at 8:55 AM on February 19, 2008

There are 2080 hours in a 40hr/week year. Multiply 2080 by the hourly wage to get the annual pay, assuming you have paid vacation. Is this one of the answers you are seeking?
posted by Daddy-O at 10:00 AM on February 19, 2008

I just went through a change from non-exempt to exempt at the same job. I was an hourly, non-bargaining employee and although I am still doing the exact same work, I am now considered professional.

It was a hard process to go through, to get this change, and we expereienced all kinds of soap-opera stupidity--I will skip giving the details but it sort of fell out that some of us thought we would "get screwed by the man," and some of us couldn't wait to get out from under the thumb.

The actual last straw for most of us was that our employer forced us to begin using those old fashioned time clocks, the ones you punch in and out with an actual card. Because we were non-bargaining, ie. non-union, there were only a small number of us that really did it, and barganing hourly employees didn't have to.

I was surprised at how the rules changed by becoming exempt. Although I was eligible for overtime before, my employer rarely used it or paid it. I worked a 40 hour week, got an hour for lunch, had sick time etc.

If I work a shorter week I am still paid the same salary, and conversely, if I work a longer week I am paid the same.
posted by chocolatetiara at 11:02 AM on February 19, 2008