Big Beautiful Series: Tips and Overtime
episode
DIY Money | Personal Finance, Budgeting, Debt, Savings, Investing
15 min
3 speakers
2 chapters
transcribed 1 month ago
Transcript
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Transcript generated automatically by AI and may contain errors.
What new tax topics are Logan and Allie introducing at the start of the episode?
Hey, this is Allie, and thanks for listening to the show. Give us a five-star review where you listen, and share this episode with someone who might need to hear it. Now, enjoy the show. What's up, everybody, and welcome back to another edition of DIY Money.
DIY Money.
What's shaking, Logan?
I don't know what's shaking with you, A. Howard. You have a more interesting life than I have.
That's not true, because one of us is buying a house, and their wife's graduating, and you're getting your life back, and you're in a wedding, and don't give me that.
That's true. I'm in the life stage right now where we just have a million weddings. I know we've talked about this before, but we just have an unbelievable amount of weddings. It feels like we have a wedding every single weekend.
Because we do.
We have one this weekend, then we have one in two weekends. My wife's in both of them. So I'm like... Stop being so popular. You've got to cut that out. You've got to know.
And you're the errand boy then. Oh, 100%. You give mad errand boy vibes.
This weekend, we like having one car there and make it easier. Because apparently everybody that we are in a wedding with does not live close to us. So we're driving at least an hour. So I'm going Saturday morning. driving an hour at 9 a.m on my saturday dropping her off and then i'm like she's like see you at six like what logan you need an assistant but then is she because in that scenario like when i've been in weddings it's like all right let me call my husband he's gonna go pick up breakfast or like oh we need to run this dress it'll be like 11 30 be like logan here's the list of things we need yep No, I've been there, done that. It's going to be another weekend just like that. It'd be glorious.
Wonderful. Okay.
Don't let them see you sweat.
Okay, let's go.
Let's move on.
I don't want to get angry about that. Okay. Allie, we have started this series. Quint and I just did an episode where we talked about what this means for the market. What the Big Beautiful Bill, the One Big Beautiful Bill Act means for the markets and what that is doing. But there's a lot of misinformation out there about what is actually the changes that are happening with the bill. One of the ones we're going to tackle today, and we do have our fancy-dancy notes for those that are watching us on YouTube because it is a little bit intricate. is talking about the changes of the taxes on tips and overtime. Now, our next episode that you and I are going to go in depth on, that is maybe not for everybody that's listening, but for their parents and things, is the changes of taxes for Social Security.
Because that one, people are missing by the mark, too. These are the same ways. Like... There's propaganda out there. There's news out there that there's no tips on or no taxes on tips or there's no taxes on overtime. It's not quite how all of this is working. So I want to get into it a little bit. But we're going to use a lot of tax terms, right? We're going to use a lot of terms in the industry, and that's how the bill is written. And the big thing is that these are not eliminating taxes, but they're adding tax deductions. So reducing, you could say, the tax, not eliminating it. Exactly. So it's a deduction. What is the difference? Because these terms are thrown out all the time, and there is stuff in this bill like child tax credit.
But when we talk about overtime or we talk about tips, it has to do with deductions. So what's the difference in a tax deduction and a tax credit?
Yeah, that's a great place to start. So a deduction, a lot of times they'll say it's an above-the-line deduction. And what the line, I'm using air quotes for those who aren't watching this video, the line is basically when they start deductions. applying tax to the number so above the line deduction means let's say i'm going to use an example you make a hundred thousand dollars at your job you have a twenty thousand dollar above the line deduction okay so when they're doing your taxes then they'll say okay a hundred thousand income minus twenty thousand dollar deduction gives you eighty thousand dollars taxable income then they take that eighty thousand they run it through the tax brackets and that's how they determine your tax so that's a deduction now credit
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