How to Calculate Wages Minus Taxes

Written by pamela gardapee
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If you need to figure out your net pay after taxes have been deducted, you need to know how an employer would go about doing this and what information it uses to calculate your net pay. You also will need to know what information you entered on the W-4 tax form you provided when you were hired. This information will include be your filing status and the number of allowances that you claimed. You should know how much you contribute to any pre-tax plan each pay period, so that you can work that into the calculation, too.

Skill level:
Moderate

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Things you need

  • W-4 information
  • Publication 15-T
  • State tax rate
  • Gross wages
  • Social Security tax rate
  • Medicare tax rate

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Instructions

    Qualified Pre Tax Deductions

  1. 1

    Calculate your gross pay after any pre-tax deductions. Take your gross pay minus how much you contribute each payday to a 401(k) or some other qualified plan. For instance, if your gross wage is £487 every two weeks and you contribute £45 to a pre-tax plan, use this formula to find the gross wage to calculate federal and state tax liabilities: £487 (gross pay) – £45 (pre-tax deduction) = £442 (gross pay).

  2. 2

    Figure the federal tax by using the gross pay after any pre-tax deductions have been subtracted. Use Publication 15-T to determine your tax liability. Use your W-4 filing status and allowances to find the correct federal tax. Publication 15-T tax tables start on page 7. There are different tables for filing status and pay periods. For instance, if your filing status is single with two allowances and you are paid bi-weekly, you would use the table for a single bi-weekly payer. With a gross pay of £442 with two allowances, your federal tax would be £9.

  3. 3

    Calculate the state tax using the tax rate for your specific state. For instance, if you live in Wisconsin and your gross pay after pre-tax deductions is £442, you would use the first tax bracket, which is .046 (4.6 per cent) because your income is less than £6,305. The formula is £442 x .046 = £20.30.

  4. 4

    Calculate Social Security and Medicare taxes using the percentage set forth by the Social Security Administration. The Social Security tax is 6.2 per cent (.062) and the Medicare tax is 1.45 per cent (.0145). The formula for Social Security is £487 x .062 = £30.20. The formula for Medicare is £487 x .0145 = £7.0. Note: Medicare and Social Security are calculated using gross pay without any pre-taxed deductions. Pre-tax deductions are not considered when calculating Social Security or Medicare.

  5. 5

    Find your net pay using this formula: £487 (gross pay) – £45 (pre tax deduction) – £9 (federal tax) – £20.30 (state tax) – £30.20 (Social Security) – £7.0 (Medicare) = £375.20 (net pay). Note: Any garnishments, union dues or insurance that you pay will be deducted from net pay after the tax deductions.

    No Pre Tax Deductions

  1. 1

    Figure federal tax by using gross pay. Use Publication 15-T to determine your tax liability. Use your W-4 filing status and allowances to find the correct federal tax. Publication 15-T tax tables start on page 7. There are different tables for filing status and pay periods. For instance, if your filing status is single with two allowances and you are paid bi-weekly, you would use the table for a single bi-weekly payer. With a gross pay of £487 with two allowances, your federal tax would be £14.

  2. 2

    Calculate state tax using the tax rate for your specific state. For instance, if you live in Wisconsin and the gross pay is £487, you would use the first tax bracket, which is .046 (4.6 per cent) because your income is less than £6,305. The formula is £487 x .046 = £22.40.

  3. 3

    Calculate Social Security and Medicare taxes using the percentage set forth by the Social Security Administration. The Social Security tax is 6.2 per cent (.062) and the Medicare tax is 1.45 per cent (.0145). The formula for Social Security is £487 x .062 = £30.20. The formula for Medicare is £487 x .0145 = £7.0.

  4. 4

    Find net pay using this formula: £487 (gross pay) – £14 (federal tax) – £22.40 (state tax) – £30.20 (Social Security) – £7.0 (Medicare) = £412.80 (net pay). Note: Any garnishments, union dues or insurance that you pay will be deducted from your net pay after tax deductions.

Tips and warnings

  • Make sure to use the most current Publication 15-T because the government updates these publications throughout the year if it makes any changes.

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