With some resources, you can calculate your net paycheck.
Every payday when you pick up your paycheck, you see that several taxes have been deducted. You may wonder sometimes how those taxes are figured and if you can calculate your paycheck after taxes yourself, or at least make a close estimate. The answer is yes. You'll need a calculator, your personal payroll information and instructions for each tax, which are available online.
Getting Started
To calculate your paycheck after taxes, you need some basic information. First, determine the number of withholding exemptions you claimed on your W-4, and keep your filing status in mind (single or married). Make a list of any non-tax deductions, and list which are tax deductible and which aren't. Of course you'll also need to know your gross (before tax) pay. Gross pay includes your regular wages plus any overtime, tips or commissions. It does not include any business expenses you will be reimbursed for along with your paycheck. Finally, you need the instructions. For federal taxes, this is Internal Revenue Service (IRS) Publication 15, Circular E. For state tax instructions you will need to go to your state Department of Revenue (or Taxation) website.
Federal Taxable Earnings
Before you can calculate the federal income tax to be withheld, you must determine your federal taxable income. First, take the number of withholding allowances you've claimed on your W-4 and multiply by the current year's allowance amount (found in IRS Publication 15, Circular E). Subtract this amount from your gross wages. Then subtract any tax-deductible items (like a contribution to a 401K). This is your taxable income. For example, suppose you are single with two withholding allowances and earn $1,000 during a biweekly pay period. You also put $50 into a 401K. You would subtract two times $146.15, or $292.30 (2012 withholding allowance) plus the $50 401K contribution, leaving $657.70 subject to federal income tax.
Federal Income Tax
To find the amount of federal tax, go to the appropriate tax table in Publication 15. Federal income tax is levied on a sliding scale with the rate increasing as your pay goes up. For the example above, you use the table for single paid biweekly. Out of the $657.70 taxable income, the first $83 is not taxed and the amount from $83 to $417 is taxed at 10 percent (this works out to $33.40). The amount over $417 is taxed at 15 percent ($36.11). Add the two amounts together for a total federal tax required of $69.51.
Other Taxes
The other federal taxes are much simpler to calculate. For Social Security in 2012, it's 4.2 percent of gross income and for Medicare, it's 1.45 percent of gross income. There is an annual earnings cap for Social Security. If you've earned more than that amount, no more Social Security tax is taken out. However, you keep paying Medicare tax no matter how much you make. Next, follow the instructions to calculate any income taxes levied by your state or city.
Finishing Up
For the final step, return to your gross wages. Subtract the federal income tax, Social Security tax and Medicare tax. Subtract any state/local taxes. Next, subtract all other deductions, whether tax deductible or not (retirement plan contributions and health insurance, for instance). What remains is the amount of your paycheck after taxes.
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