Calculating the net pay of numerous employees on payday is quite a hectic job. You need to go through different calculations to deduce the result, yet you still fear any error that could affect your company's financial assets.
Moreover, an "accurate" paycheck calculation is also necessary from the employee's point of view, especially when starting a new job or get a raise. It is because this is not as simple as determining income by multiplying your hourly rate by the number of hours worked.
In fact, you have to go through several deductions, withholdings, and calculations to deduce your take-home amount. Thus, a simple miscalculation will cause the wrong determination of Salary and Personal Budget.
Therefore, to prevents such blunders, employers are suggested to use an accurate and precise tool that could minimize their paycheck calculation process and save precious time & money.
Now the question is; what tool should you use?
If you are running a start-up or small company and can’t afford the expensive payroll processing software, then you are recommended to use our Paycheck Calculator. This tool is created by the experts of this field after days of hard work, research, and dedication, without charging a single penny to the users. It can calculate your paycheck easily by minimizing the chance of human error and saving a lot of time.
For fantastic user experience and accuracy, our tool is divided into four sections, as stated below:
Here you need to enter your salary information such as:
Pay on our Paycheck Calculator is categorized into two types, that you can choose from the dropdown menu:
It is the duration of how often the employee is paid for his work. Our Calculator offers the following Pay frequencies:
If you are thinking about the differences and advantages of bi-weekly and semi-monthly payment methods, read the points below:
It is an option to enter the hourly rate for employees who are paid on an hourly basis.
It is an option to enter Regular Hours of the hourly employee.
According to State Law, every employee on an hourly basis who works for more than the regular hours must be paid overtime bonuses. The laws bound the employer to pay its hourly employee, one and a half times the regular hourly rate for work over 40 hours a week. Wherefore, to calculate paycheck for your hourly employee, our Paycheck Calculator gives you an option to enter overtime hours in Hours (Time & 1/2) field.
Hourly Employees are paid twice the regular hourly rate for work over 40 hours a week on some particular circumstances such as work on holidays and Sundays. Though FSLA doesn't require such practice by the employer but some state labor laws do. Additionally, some employers also pay it to encourage their employees. So, if you have a Double Time Policy, you can easily use the option to enter the double-time hours under the Hourly Pay section.
Some companies have the policy to award their best performing employees with bonuses, commissions, or tips when they accomplish certain criteria or goals. Therefore, if your company has the same policy, then our Paycheck Calculator also gives you an option to enter such a bonus amount.
Federal Withholding is an amount that an employer withholds from the paycheck of its employee, to directly remit to the federal authorities. This Withholding Tax is adjusted in the Yearly Income Tax, that an employee has to pay. This amount is deducted to ensure that all the residents of the United States are paying their income tax regularly. It also helps the employee to pay his/her income tax partially instead of lump amount every year. This amount is used by the government to improve the living standard of the residents and state development.
Our Paycheck Calculator gives you an option to choose:
The amount of Federal Withholding Tax that the employer withholds from its employee is determined by several factors, including:
Each employee needs to fill out Form W-4 with all the exact and necessary details, including the factors mentioned above. The employer later submits this form to federal authorities.
Our Paycheck Calculator gives an option to choose your marital status for accurate determination of withholding tax.
As all employees have different factors in life required for withholding tax determination. Therefore, they have an option to claim an allowance and get exempted from paying a certain amount of income tax.
The amount of withholding tax that an employer withholds is inversely proportional to the number of allowances claimed. In simple words, the more allowances you claim, the less the amount of withholding tax would be charged. However, you have to maintain a balance between the number of allowances and tax amount, as you may end up overpaying or underpaying taxes.
If you have overpaid, you may get a tax refund, but if you are underpaid, then you would definitely be charged with a penalty by IRS.
Now the question is How Many Allowances Should I Claim?
To determine the number of allowances you should claim for maximum advantage and minimum risk for the penalty, you can consider the following points:
Note: The points mentioned above are just estimated to calculate your exact number of allowances. You should refer to the Personal Allowance Worked Sheet provided by the IRS for accurate determination.
Apart from Federal Income Tax, the employee has to pay additional taxes in the form of FICA (Federal Insurance Contributions Act) Tax that includes:
Social Security is the portion of an amount withheld from employee's and employer's income for the Social Security Program. This program helps millions of American residents by paying for their retirement, disability, and survivorship.
It is the portion of an employee’s and employer’s wage that is withheld for a federal health insurance program. This program pays for the medical treatment of millions of American residents. The Health Insurance Program consists of four parts; medical insurance, hospital insurance, Medicare Advantage plans, and prescription drug coverage.
Note: For the Latest Medicare Rates, you can refer to the IRS Website.
If an employee earns more than a certain amount of Salary, than he is subjected to pay Additional Medicare Tax.
Note: There are over 43 States of America imposing their income tax, including the basic federal income tax. Thus, you might be charged for both taxes.
Besides Federal Income Taxes, employers are required to withheld an additional amount from the employee's Salary as State Income Tax. The withholding amount and state rules vary from State to State.
Our Paycheck Calculator is updated with all the rules and rates for State Income Tax. Wherefore, you need to choose your desired state from the dropdown menu under the "State Withholding" section.
Note: As this Paycheck Calculator is mainly designed for the United States, therefore, only States of the United States are included in the dropdown menu.
In this section, you need to enter your Name and Date of Paycheck Calculation.
In the United States, the basic salary is often considered the amount before deducting the tax amount – also known as gross pay. In simple words, gross income is often used to get a hand of mortgage applications, compare salaries, and analyze the tax brackets. Gross income is the raw income figure before any government or private decurions are made i.e. allowances, federal tax, health insurance, provident fund, and more. All these deductions vary from employee to employee.
If we talk about comparing personal finance, after-tax income figure is more practical that is actually the amount you get in your bank account or by live check. For example, ordinary employees getting regular paychecks on payday can calculate the total amount they make in a year or how much they will have after getting the next paycheck.
Thus, your annual income is not the before-tax amount you get from your employer but the after-tax amount shown in the final paycheck. In a nutshell, after-tax income figure is the salary given to you after deductions.
Before jumping to the guide on how to use our paycheck calculator, here are a few points that the employers and employees must remember regarding Federal and State Withholding tax:
Every employee must fill out the W-4 form and submit it to his/her employer, who later presents it to the IRS. This form includes all the personal information, including your Marital Status, your dependents, Head of Household information, number of children, and number of allowances you are willing to claim.
Employees with very low earning are not liable to pay taxes. If, somehow, they have paid them, then they are likely to get a refund at the end of the fiscal year.
Apart from Social Security, Medicare, and Additional Medicare, employees also have an option to opt for Health Saving Account and Flexible Spending Account, which helps people save money for future medical expenses. The amount of these programs is also deducted from the paycheck as additional withholding.
The employee also has an option for pre-tax retirement contributions such as 401(k) or 403(b), where a certain percentage of amount is withheld from the paycheck before any income taxes are withheld. Making such pre-tax contributions decreases the amount of income tax you have to pay. Moreover, you also get an advantage to grow your money at a specific rate according to your opted plan, where tax is only applicable when you withdraw it.
Other than Pre-tax contributions, you can also go for Post-tax contributions such as Roth 401(k) contributions. It is the amount withheld after your income-tax deductions from a paycheck. The advantages of such contributions are that your contributed money will grow on a specific rate, and will not be charged with any taxes on withdrawing it. (as you have already paid it on the time of withholding).
Although this tax is very uncommon in the US, but 1/10th of the total population of the United States are subjected to pay City/ Locality/ Municipal Income Tax along with State and Federal Tax. This tax is usually charged to the residents of large cities such a New York. Therefore, if you are subjected to such tax, then you must include it into your Additional Withholdings.
As you have learned about all the essential terms regarding Paycheck calculations, you don’t need any further rocket science to operate our Paycheck Calculator. Follow the steps below and get results in no time:
Note: As required, information to calculate paycheck varies with Pay Type; Hourly and Salary, so we have divided the steps below into types. Each Type is for each Pay Type:
Note: You can refer to “Section 1 – Income Information” under “Why use our Paycheck Calculator?” heading, above, to read complete details about Pay Type and Pay Frequency.
Note: You can refer to “Section 2 – Federal Withholding” under “Why use our Paycheck Calculator?” heading (above) to read complete details about Marital Status, Withholding Allowances, and Additional Withholding.
Note: For more details, please refer to “Section 3 – State Withholding”, under “Why use our Paycheck Calculator?” heading above.
Note: You can refer to “Section 2 – Federal Withholding” under “Why use our Paycheck Calculator?" heading (above) to read complete details about Marital Status, Withholding Allowances, and Additional Withholding.
Note: For more details, please refer to “Section 3 – State Withholding”, under “Why use our Paycheck Calculator?” heading above.
Answer: The following tips can help you keep more of the money you earn:
If you think your Income Tax refund last year was too large, or income tax you paid was higher than the average tax paid by US Employees, then you should reconsider your Form W4 and its Allowances.
The more allowances you claim, the less the amount of your paycheck would be deducted. However, getting too far with it may land you in trouble and penalty by the IRS. Therefore, you have to keep a balance between your Withholdings and Allowances. You can learn more about your Allowances in "Section 2 – Federal Withholding" under "Why to use our Paycheck Calculator?” heading above.
An increase in Salary is one of the most obvious ways to increase your Take Home Paycheck amount. Thereupon, you need to improve your performance and achieve goals set by the company to increase the rank (promotion) and increase in pay scale (appraisal). Moreover, you can also make an effort to earn bonuses. However, If your company isn't in a position for any favors mentioned above, then it's better to look for another job with a better salary.
Sometimes, there are some additional withholding amounts deducted from our paycheck. We can re-evaluate them to reduce it. Such amounts include Health Insurance, disability, and life insurance plans. If you are fit and healthy, then you are suggested to lower your policy to decrease the cost. Moreover, if you have a working spouse, you can also try going for a family plan from your company or your spouse’s company and abandon the other one to reduce the cost.
An employee on Hourly Wage has a unique opportunity to earn extra by working overtime. According to the Fair Labor Standards Act (FLSA), all employees on Hourly Wage should be paid Overtime, having an hourly rate of minimum one and half times their regular rate of pay if they work for more than 40 hours in a week. On the other hand, Salaried employees are exempted from according to this law. However, if a company is willingly paying Overtime, then they are allowed to do so.
If you are going through the financial crisis and require an immediate increase in the paycheck. Then you have an option to pause or lower your Pre-Tax or Post-Tax contributions such as 401(k). In case you don't know about the 401(k) contribution, it is a retirement saving plan offered by the employer. This plan helps the employee to save money for their future (after retirement life). This money is withheld before the employee's Salary is subjected to income tax, and is taxed only when withdrawn.
Flexible Spending Account (FSA) account is an account open by the employer for their employees to give them specific tax advantages. This account withholds a portion of the employee's salary before it is subjected to income tax. This amount is used for employee's medical and dental-related expenses, whereas other FSA accounts plan also include childcare expenses. However, opening such an account won't give an immediate increase in your take-home amount. If you require an amount for medical treatment in the future, then you can take more money home with FSA than disposable income. Therefore, you have the advantage of spending money on your medical expenses without paying taxes.
Paid Time Off is an advanced and combined form of traditional Sick Leaves, Vacations, paid leaves, etc. These opportunities are offered by employers to their employees to provide them a better work-life. However, in some cases, employers offer an amount of money in exchange for the unused PTOs. Therefore, you should ask your HR or refer to your employment contract to know about redeeming your unused PTO and increase your take-home amount.
Not all employees get a pay raise, PTO redeeming, bonuses, or other incentives to increase the Take Home Amount. However, they always have an option to look for another side job or part-time job to earn extra cash.
Go through your daily expenses to look for work-related expenses like traveling, food, clothing, tools, etc. that you might be paying from your pocket. If so, ask your employer to pay for it.
Some of the companies provide free services like gym, house cleaning, on-site childcare, internet, phone, or fuel. You should go through the company's policies or an Employment contract and look for such incentives that you can avail. It would reduce your expenses. Consequently, you would have a lot more to save from your earning.
Answer: To calculate your take Home Pay, follow the steps below:
To calculate your Net Paycheck (Take Home Pay), you need to determine your Gross Pay. For salaried employees, Gross Pay is easy to know. Simply divide the annual pay by pay frequency. However, Hourly employees are suggested to follow these steps:
Once, gross Pay is calculated, you can use our Paycheck Calculator, located at the top of this page to determine your take-home pay, by following these steps:
Answer: Taken Out amount depends on your gross paycheck amount, your allowances claimed, state you live in, and contributions & insurance plans you have opted. Here are types of tax you will / may be charged:
Answer: To calculate your Bi-weekly pay after the deductions of withholdings and taxes, you are suggested to read the answer to FAQs - Question # 2.
Answer: The amount of taxes deducted from your paycheck in New York depends on your income. However, an additional Local Income Tax is to paid while working in New York, along with all other taxes discussed in FAQs Question # 3.
Answer: To calculate your Net Pay, please refer to FAQs – Question # 2, for the detailed explanation.
Answer: As an employer, if you want to calculate payroll taxes, then follow the steps below:
According to Federal Labor Law, each additional hour worked after 40 hours in a week, would be considered as Overtime and should be paid at the rate of 1 and half times of regular hourly rate. So, calculate the overtime hours and multiply it by one and half times the regular hourly rate to get Overtime Pay. Add this Overtime Time to the Gross Pay to get Final Gross Pay of an employee.
Note: You can refer to the tax tables from the IRS in Publication 15: Employer's Tax Guide) OR “Section 2 – Federal Withholding” under “Why use our Paycheck Calculator?" heading (above) to read complete details about Marital Status, Withholding Allowances and Additional Withholding. Moreover, you can refer to the IRS website for all the latest rates of Income Tax, FICA Tax.
Answer: To calculate payroll, please refer to FAQs – Question # 2, for the detailed explanation.
This paycheck calculator is really amazing as it is serving in all the states of USA. It has been serving as a paycheck calculator for: