Things You'll Need:
- Calculator
- IRS federal income withholding tax table
- Applicable state income withholding tax table
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Step 1
Calculate your gross wages by multiplying the hours worked for your pay period (1 week, 2 weeks or 1 month) by the pay rate you receive per hour. If you work 40 hours per week and are paid at a rate of $10 per hour--and you are paid on a weekly basis--your gross wages for the pay period will be $400.
Incorrectly calculating your gross wages will result in incorrectly calculating your net pay after pre-tax deductions and your income taxes, so it is important to make sure your starting number (your gross amount) is correct. -
Step 2
Calculate any overtime wages for the pay period. The total gross wages figure should include any overtime compensation for the same period. Multiply the overtime hours by the overtime rate. For example, if you worked 10 overtime hours and are paid time and a half ($15) for overtime, this should add up to $150 in overtime pay. Therefore, your gross for the week would now be $550. ($400 + $150), since it includes overtime.
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Step 3
Subtract all of your pre-tax deductions from your gross wage total for this pay period. Pre-tax deductions for this purpose will include all medical and health-related items (medical insurance and dental insurance), as well as any retirement or investment plans (401K). However, any contributions made by your employer are not included in this amount. Additionally, items not pertinent to medical expenses or retirement funding are not included in this deduction.
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Step 4
Calculate your federal income tax by choosing the correct income tax withholding table and locating your filing status (single or married), withholding allowances (zero and up) and your net pay on it. These tables are broken down into three pay periods--weekly, bi-weekly or monthly--and can be accessed via the link listed in the resources section below or online at the Internal Revenue Service website. Be sure to choose the correct table that fits your pay period first and foremost. Otherwise, your calculations will be incorrect.
Page 7 on the IRS-revised 2009 Income Tax Withholding Table reflects that a single-status filer with two withholding allowances, who has an income of at least $450, would pay $23 in federal income tax. -
Step 5
Calculate your state income tax, unless your state is Florida or Alaska, which doesn't require one. The process of calculating your state income tax is similar to the process used for calculating your federal income tax: use the proper income tax table (correct pay period--weekly, bi-weekly or monthly; correct filing status--single or married; and the correct number of withholding allowances). Then, locate your net pay amount on the table (under the correct withholding number) and you will find the state income tax due.
Using the earlier example, if you were a Georgia single filer claiming two withholding allowances, and your net pay was $450 after pre-tax deductions, your Georgia state income tax would be $15.24 for the pay period.
