Calculate take home pay
To calculate take home pay, just add all deductions and then subtract the total deductions from the gross pay.
Definition of take home pay: Also called net pay, the take home pay is the money that is left after all deductions have been subtracted from the gross pay.
Definition of deductions: All money taken away from your gross pay
Definition of gross pay: The amount of money paid to an employee before deductions
Take home pay = Gross pay  deductions
Example #1:
Steve is a computer programmer and he works 35 hours a week. Steve gets paid $25 / per hour. Calculate take home pay
The following are deductions from Steve's paycheck:
Federal tax: $130
State tax : $25
Health insurance: $80
Medicare tax: $52
Disability: $12
Union dues: $21
First, calculate total deductions:
Total deductions = Federal tax + State tax + Health insurance + Medicare tax + Disability + Union dues
Total deductions = $130 + $25 + $80 + 52 + $12 + $21
Total deductions = $320
Second, calculate steve's gross income:
Gross pay = Number of hours worked × rate
Here, the rate is how much you get paid per hour
Thus, gross pay = $35 × $25 = $875
Take home pay = Gross pay  deductions
Take home pay = $875  $320
Take home pay = $555
Example #2:
Amy is a nurse and she works 52 hours a week. Amy gets paid $50 / per hour for regular time and $75 / hour for overtime
The following are deductions from Amy's paycheck:
Federal tax: $150
State tax: $54
City tax: $24
Health insurance: $100
Medicare tax: $45
401k contribution: $80
First, calculate total deductions:
Total deductions = Federal tax + State tax + City tax + Health insurance + Medicare tax + 401k contribution
Total deductions = $150 + $54 + $24 + $100 + $45 + $80
Total deductions = $453
Second, calculate steve's gross income:
Gross pay = Number of hours worked × rate
Since Amy worked 52 hours, there is overtime pay.
Regular pay = $40 × $50
Regular pay = $2000
Overtime pay = $12 × $75
Overtime pay = $900
Gross pay = Regular pay + Overtime pay
Gross pay = $2000 + $900
Gross pay = $2900
Take home pay = Gross pay  deductions
Take home pay = $2900  $453
Take home pay = $2447

May 21, 17 09:19 PM
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