How are tax deductions calculated per pay period for overtime and call pay?

I'm looking for some clarification about tax deductions on my paychecks. I work at a regional hospital and regularly take call nights and weekend shifts. We get time and a half pay plus an extra call bonus for these shifts. The thing is, I've noticed that the tax deductions seem really high on paychecks when I work a lot of call shifts compared to my regular paychecks. It almost seems like I'm being pushed into a higher tax bracket just for that pay period? Is that actually how payroll taxes work? Do they calculate deductions based on what you would make annually at that pay period's rate, or do they just take a flat percentage? My last paycheck had almost 35% taken out in various deductions when I worked three call shifts in a single pay period. Any insight would be appreciated! I'm trying to figure out if I should adjust my withholdings or if this is just how the system works.

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18 comments

Paloma Clark

•8M

This is a common confusion with payroll tax withholding. Your employer's payroll system typically calculates withholding on each paycheck as if you'll earn that same amount for every pay period of the year. So when you get a larger paycheck (like one with overtime and call pay), the system thinks "oh this person is now making X% more annually" and withholds at a higher rate. The good news is that when you file your taxes, everything gets reconciled based on your actual annual income. Any excess withholding will come back as a refund. It's not that you're permanently losing that money - it's just being held until tax time. If you want more consistent take-home pay, you could adjust your W-4 to withhold less, but be careful not to underwithhold or you might owe taxes (plus possible penalties) when you file.

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Paloma Clark

•8M

If you're typically getting a small refund, your withholding is actually pretty well calibrated! Whether to adjust depends on your financial preferences. Some people prefer a larger paycheck and owing a small amount at tax time (just stay under $1,000 owed to avoid penalties). Others prefer the "forced savings" of overwithholding a bit and getting a refund. If you want to fine-tune it, you can use the IRS withholding calculator on their website to get a more precise recommendation based on your specific situation. Just make sure to recalculate if your work schedule or call shift frequency changes significantly.

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Raul Neal

•8M

I had the exact same issue when I was working as a nurse with crazy on-call hours. The tax withholding was driving me nuts until I found taxr.ai (https://taxr.ai) which explained exactly what was happening. I uploaded my paystubs and their system explained that the withholding system was treating each paycheck as if that's what I'd make all year. The tool showed me that I was overpaying about $175 per paycheck during heavy call weeks! They helped me figure out the right W-4 adjustments so my take-home pay is way more consistent now, regardless of how many call shifts I work.

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Raul Neal

•8M

For multiple jobs, it's actually one of the best features. You upload paystubs from both hospitals and it calculates the correct withholding considering your total income from all sources. This was a game-changer for my colleague who works at both a hospital and a clinic. You only need to upload paystubs or take pictures of them - no need to provide bank details or anything like that. It uses the same withholding formulas as the IRS but applies them correctly across variable income. I was skeptical too until I saw how it broke down exactly which parts of my paycheck were being overwitheld.

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Christian Burns

•8M

I want to follow up about taxr.ai that I asked about earlier. I decided to try it with my last three paychecks - one normal and two with heavy call schedules. You guys weren't kidding! It showed me exactly why my withholding was all over the place and recommended a specific W-4 adjustment. I made the change two weeks ago and just got my first paycheck with the new withholding. Even though I had call shifts, my take-home pay was only about $70 less than it would have been without them, instead of the $200+ difference I was seeing before. Definitely worth checking out if you have variable pay!

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Sasha Reese

•8M

If you're having trouble getting actual tax advice from a human at the IRS about this withholding issue, I highly recommend Claimyr (https://claimyr.com). I spent weeks trying to get through to the IRS about my withholding issues with variable income from hospital shifts. After waiting on hold for hours multiple times, I found Claimyr and they got me connected to an actual IRS agent in less than 20 minutes. The agent walked me through exactly how to adjust my withholding for my specific situation. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. So much easier than trying to interpret the W-4 worksheet on my own!

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Sasha Reese

•8M

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Noland Curtis

•8M

I need to eat some crow here. After my skeptical comment about Claimyr, I figured I'd try it myself to prove it was bogus. Wow was I wrong! After three previous attempts waiting on hold with the IRS for over 2 hours each time (and getting disconnected twice), Claimyr had me talking to an actual IRS agent in 17 minutes. The agent explained that for variable income like hospital call pay, I should be using the multiple jobs worksheet on the W-4, not just adjusting the additional withholding line. This was completely different from what I'd been doing. She also told me how to calculate a better withholding amount based on my expected annual call shifts. Sorry for the skepticism before - this service is legit!

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Diez Ellis

•8M

In that case, your payroll department is actually handling it correctly! The 22% flat rate for supplemental wages (like bonuses, overtime, etc.) is the standard IRS method. For most people in the 10%, 12%, or even 22% tax brackets, this might result in slight overwithholding, but it's generally pretty accurate. I'd suggest keeping things as they are for now. If you want to fine-tune it further, track your pay for 3-4 months and then use the IRS Tax Withholding Estimator to see if any adjustments are recommended. But from what you're describing, your payroll system is already doing what it's supposed to do.

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