Use our Take Home Pay Calculator to estimate actual paycheck bring home after taxes and deductions from salary. Please note that it is mainly intended for use by U.S. residents. This calculator gives results based on both 2016 and 2017 tax brackets.
In the US, income can take on two different forms: before- or after-tax (and deductions). While most people use the former in conversation and comparison, the more meaningful figure is after-tax, the amount actually disbursed for usage. Figures entered into ‘Your Annual Income (Salary)’ will be before-tax, otherwise known as gross pay.
Employers automatically withhold taxes and deductions from employees’ paychecks. However, independent contractors and self-employed individuals need to submit quarterly or yearly tax payments themselves.
There may be pay frequency requirements for certain states, and it is probably best to operate within those regulations. Federal and state laws also dictate that pay is to be released in predictable and routine streams. Pay periods have no effect on tax liability.
The most common methods of pay frequency are weekly, biweekly, semi-monthly, and monthly. It is important to make the distinction between bi-weekly and semi-monthly, even though they may seem similar at first glance. Bi-weekly is not schedule dependent of dates, but simply occurs every other week. Also, bi-weekly frequency will generate two more paychecks a year (26 compared to 24 for semi-monthly).
In general, employees like to be paid more frequently due to psychological factors and immediate use, and employers like to pay less frequently due to the costs associated with each individual released payment. Although employers generally dictate the terms regarding pay frequency, it is most likely in their best interest to mutually come to agreeable terms with their employees on what type of pay frequency is preferred within legal bounds.
The most common options will be “Single”, “Married Filing Jointly”, and “Head of Household”. The following are the definitions of IRS:
Single Not married, divorced, or legally separated according to state law.
Married Filing Jointly A married couple together filing a return together.
Married Filing Separately If a married couple decides to file returns separately, each of their filing status should generally be Married Filing Separately.
Head of Household Only applies to anyone not married and has paid more than half the cost of maintaining a home for themselves and a qualifying person.
Qualified Widow This filing status requires a dependent child, and allows for the retention of the benefits associated with the “Married Filing Jointly” status for two years after the year of the spouse’s death.
It is possible for someone to be able to claim more than one filing status. For instance, a “Single” person can also file as “Head of Household” or “Qualifying Widow” if the conditions are met. Given these options, it is possible for a taxpayer to evaluate their options and choose the filing status that results in the lesser amount of taxation.
The W-4 form is distributed to employees by employers to obtain information about how much in income tax to withhold from paychecks. Most people will be required to fill one out upon starting a new job, but remember to submit new ones if relevant personal or financial situations change. Generally, the more allowances claimed, the less tax will be withheld from each paycheck.
Single people with one job and no kids may claim 2 allowances, which allows more paycheck upfront, but will result in less in the future tax return. Taxpayers with dependents (usually in the form of children) can add one allowance for each. In the case of a married couple with one child, each parent may claim three allowances, four for two children, so on and so forth. Anyone classified as a dependent may claim 0 allowances on their W-4 form. Please be aware that paying too little tax upfront by using a high allowances number may cause IRS penalty in annual tax filing.
Regardless of the number of allowances claimed, the total tax paid for a certain year will not change, only when the tax is paid. Therefore, erratic spenders who want a strict method to control spending can consider claiming fewer allowances in order to withhold more in taxes for a smaller paycheck.
As an aside, tax on interest, investment return, bonuses, earnings from gambling, and commissions can also be withheld.
This input should be the sum of any and all other additional deductions taken out of each paycheck before they are released. Examples of deductions that fit this category include, but are not limited to the employee share of the following: