Small Business Resource Blog: Calculating Overtime Taxes

Here is the opening from a piece I wrote for The Green, Clover POS’ small business blog.

Tracking overtime can be a huge headache for small business owners. But it’s also super important that you stay on top of it. Your employees’ overtime work doesn’t just affect their pay, it can also impact your payroll taxes, which need to comply with federal, state, and city labor laws.

While it’s easy to assume that overtime is taxed more, the truth is it’s not–the overtime tax rate is exactly the same as it is for an employee’s regular wages. However, overtime earnings can push workers into a new tax bracket. And when that happens, you’ll need to adjust how much to withhold in their payroll. 

Read on to learn how overtime pay can impact the tax brackets your employees are in, how to calculate taxes with overtime, and how apps like Time Clock by Homebase can simplify the process.

Read the full post here (published 4/5/2023).