What is the “Take-Home-Pay”?
The take-home-pay is the net earning that is left after the tax deduction, benefits, and contributions. It is the gross income less all the deductions. The deductions include income tax, social securities, Medicare contributions, IRA contributions, and other insurance premiums.
The income is defined as the amount of money received as compensation, interest, wages, salaries etc. The more meaningful figure of the income is after-tax.
The pay frequency is the money received in the form of income at regular intervals like weekly, biweekly, semi-monthly and monthly.
The options in the file status are single, married filing jointly, head of household etc.
Single: The person is not married, divorced, or legally separated etc.
Married filing jointly: The married couple filing the returns together.
Married filing separately: The married couple filing the returns separately.
Head of Household: The person who is not married and has to pay half of the cost of maintaining a home.
Qualified widow: The person should have at least one dependent child and should have benefits related to married filing jointly status for two years after the year of the spouse’s death.
The deductions are defined as paying off the expenses from the income earned. The deductions include Medicare, tax-deferred investments, and IRA contributions etc.
Income tax is defined as an annual tax that government imposes on individual or entities based on financial income or profits. By law, the entities or individuals must file an income tax return every year to identify that they owe any taxes or eligible for any tax refund. This income tax is the key sources of funds for the government to serve the public. The different types of income taxes are federal/state/local taxes, FICA tax etc.
The components included in the Take-home-pay calculator:
- Annual income: The annual income of the person.
- Pay Frequency: The frequency for receiving the income.
- File status: The marital status of the person like single, married etc.
- Number of federal allowances: The number of federal allowances.
- Total pre-tax monthly deductions: The pre-tax monthly deductions from the income.
- State tax rate: The state tax rate on the income earned.
- City tax rate: The city tax rate on the income earned.
- Are you self-employed or an independent contractor: yes or no.
This take-home-pay calculator helps to estimate the actual take-home amount after taxation and deductions from the gross salary.