How Can I Figure What My Net Paycheck Will Be?
Your net pay is your earnings after deductions occur. It is also called your take-home pay. If you're an hourly employee, you're paid according to hours worked during the pay period; therefore, your net pay may fluctuate each payday. If you're salaried, your net pay generally stays the same, unless you have a wage or deduction change. For budgeting purposes, you may need to know what your next paycheck will be. With the right formulas, you can figure it out.
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Things You'll Need
- IRS Circular E
- W-4 form
- State income tax withholding guidelines
- Medicare tax rate
- Social Security tax rate
Instructions
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Determine what your gross pay will be. Multiply your total work hours for the pay period by your pay rate to arrive at your gross earnings. Include overtime, if applicable. If salaried, divide your yearly salary into the number of pay periods in the year to arrive at gross salary per period.
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Subtract pretax voluntary deductions from gross earnings. Pretax deductions, such as a flexible spending account or a traditional 401(k) plan, are deducted from gross pay. The remainder is your gross taxable wages.
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Withhold federal income tax from gross taxable wages. Consult lines 3 and 5 of your W-4 form for your filing status and allowances. Obtain IRS Circular E's withholding tax tables from the IRS website. Use the withholding tax table specific to your pay period, filing status, allowances and income to determine federal income tax.
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Withhold Medicare tax at 1.45 percent of all gross taxable wages and Social Security at 6.2 percent of gross taxable wages, up to the annual wage limit of $106,800.
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Withhold state income tax from gross taxable wages. Use your state revenue agency's guidelines to determine state income tax, if applicable. If you work in Georgia, for example, use your Georgia Employee Withholding Allowance Certificate and the state withholding tax table to figure state income tax. If city or local income tax applies, your state revenue agency can give you the withholding rates. The remainder is your disposable income, which is subject to wage garnishment or child support withholding, if applicable.
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Deduct post-tax voluntary deductions, such as Roth 401(k) and union dues. The remainder is what your net paycheck will be.
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Tips & Warnings
You can use an online paycheck calculator, such as PaycheckCity.com, to figure your gross-to-net earnings.
