How Do You Figure Out Net Income After Taxes?
People generally want to know how much their checks will be after taxes. Knowing how to figure out net income after taxes helps people decide what bills to pay and gives them a better idea about how much is actually going to federal, state, Social Security and Medicare taxes. If there are other deductions, this can put a strain on the budget if you don’t know exactly how much your net income will be when you get your check. Understand that 401(k) monies are deducted from gross income before any federal or state taxes are deducted. However, Social Security and Medicare are withheld from the gross before the 401(k) deduction. Health savings accounts are not subject to Social Security, Medicare or income tax withholding. As an example, let’s use Todd. He’s married with no withholding allowances on his W-4 form, lives in Wisconsin and has a gross income of $658.58 for a two-week period. Todd contributes $25 a pay period to a 401(k) plan and $25 to a health savings account. Calculate the So
