How to Calculate Your Next Paycheck

You can successfully calculate your next paycheck so that you know exactly how much money you will have on payday. Before you calculate your net pay, you must know what your gross pay is and how much is deducted from your checks before taxes for a 401(k) plan, any pretax health care plans or a 529 college fund. Pretax deductions do not affect Social Security and Medicare and are subject to tax according to the gross pay.

Difficulty: Easy

Instructions

Things You'll Need:

• All pretax deduction amounts Gross income All deductions such as union dues and garnishments Number of allowances claimed on a W4

With Pretax Deductions

1. Subtract all approved pretax deductions from the gross amount of pay. The remainder is what you will use to calculate federal and state tax.

2. Calculate federal tax by using the gross after you subtract pretax deductions. Use Publication 15-T (see References) to find your federal tax liability. The tables start on page seven of the guide. Find your marital status and pay period. You can choose single or married with weekly pay, bi-weekly pay, semi-monthly or monthly. Find the total gross pay and look under the number of allowances you claimed on the W-4 to find your tax.

3. Calculate state tax by using the gross pay after you subtract the pretax deductions. Use "State Information for Tax Withholding" (see References) to find the percentage used for your state tax liability. Each state has a different percentage to use for calculations.

4. Subtract 6.2% (.062) from your gross pay to calculate your Social Security tax on the gross pay before pretax deductions.

5. Calculate Medicare tax on the gross pay before pretax deductions. Subtract 1.45% (.0145) from your gross pay.

6. Calculate net-take home pay per this example: gross pay -- pretax deductions -- federal -- state -- Social Security -- Medicare -- Any garnishment, unions dues (if any) -- health insurance premiums (if any) -- life insurance premiums (if any) = Net Pay

No Pretax Deductions

7. Calculate federal tax by using the gross pay. Use Publication 15-T (See Reference) to find your federal tax liability. The tables start on page seven of the guide. Find your marital status and pay period. You can choose single or married with weekly pay, bi-weekly pay, semi-monthly or monthly. Find the total gross pay and look under the number of allowances you claimed on the W4 to find your tax.

8. Calculate state tax by using the gross pay. Use "State Information for Tax Withholding" (See Reference) to find the percentage used for your state tax liability. Every state has a different percentage to use for calculations.

9. Calculate your Social Security tax on the gross pay. Subtract 6.2% (.062) from your gross pay. Example: gross pay x .062 = Social Security tax.

10. Calculate Medicare tax on the gross pay. Subtract 1.45% (.0145) from your gross pay. Example: gross pay x .0145 = Medicare tax.

11. Calculate net take home pay per this example: gross pay -- federal -- state -- Social Security -- Medicare -- Any garnishment, unions dues (if any) -- health insurance premiums (if any) -- life insurance premiums (if any) = Net Pay.

References

• Publication 15-T
• State Information for Withholding Tax