You many wonder how payroll adjustments affect your take-home pay. Contributions to a qualified plan, participation in a company-sponsored cafeteria plan, change in filing status, or the number of allowances claimed will have a direct impact on your take-home pay after taxes and all other deductions come out of your paycheck. For example, due to federal tax savings, contributions to a qualified plan do not translate into a direct dollar-for-dollar tradeoff on take-home pay. Use this calculator to help compare your current situation to what-if scenarios.
What Is My Take Home Pay Calculator?
Using the payroll tax calculator from Money Help Center helps you understand what your taxes and income are after pretax benefits have been withdrawn. The reality is when you get your paycheck, you may notice you are not getting the hourly wage listed in your employee agreement. This is because, in addition to tax withdrawals mandated by the government, your employer may also be withdrawing money for pretax benefits, such as your retirement plan, dental or vision coverage and more. Understanding what is being withdrawn and how much you are taking home is important for a few reasons:
- It allows you to make smarter choices about benefits. While benefits are important to protect you in case of medical expenses or other emergencies, if you are having trouble covering your living costs because of how much is withdrawn from your pay, you might want to meet with HR to find ways to adjust your benefits. Carefully consider the benefits you want and evaluate whether they meet your needs and offer adequate coverage. Be sure to read the details of each benefit. Pay special attention to any benefits you may not use or any benefits that overlap.
- It helps you understand your tax obligations. Some benefits offered by employers are pretax benefits, meaning the money for the benefits is taken out before taxes are calculated. Many retirement plans work this way, for example. This can have tax advantages for you. Understanding what is taxed and what isn’t on your wages can help you understand how much you owe in April, which can help you plan for your filing deadline.
- It helps you evaluate your income more effectively. Your wages may look great on paper, but how much are you really earning? Understanding take-home pay lets you make smart career and income decisions.
- It helps you to budget by helping you understand how much you really earn. Understanding how much you are earning after withdrawals and what your tax obligations are lets you understand your finances more fully. Knowing how much you actually take home allows you to make smart decisions about your budget, savings and more. You may find, for example, that certain benefits offer important tax advantages that can help you save money. You may also find that your take-home pay requires you to make adjustments in your spending habits so you have enough for everything you need.
Understanding your take-home pay can help you adjust your expenses and savings to live comfortably within or below your means. Money Help Center is committed to helping you financially. Our bias-free, no cost calculators help you take the guesswork out of crunching the numbers. Our calculators easily help you figure out your after-withdrawal pay, your benefits and more.