Your paychecks will be smaller, but less of your money will go to the government.Ī financial advisor can help you understand how taxes fit into your overall financial goals. Because they are pre-tax (which means they come out of your pay before income tax is applied) these contributions will also lower your taxable income. If you make pre-tax contributions to a 401(k), a flexible spending account or a pre-tax commuter card, those contributions will come out of your earnings. These premiums will be deducted from each of your paychecks. It can also affect your paycheck if you pay more in health insurance premiums to cover a spouse or children. Your marital status will indirectly affect your paycheck size because it will affect your tax filing status. Instead, it features a five-step process that lets you enter personal information, claim dependents and indicate any additional income or jobs. The recently updated version of Form W-4 no longer uses allowances. Employees must fill out Form W-4 to indicate any changes to these factors. This withholding will depend on things like your income, filing status and number of dependents and exemptions. In addition to FICA taxes, your employer will also withhold federal income taxes from your earnings. (They will probably appear under that name on your pay stubs.) Any earnings you make in excess of $200,000 are subject to an additional 0.9% Medicare tax that your employer does not match. Together, Medicare and Social Security taxes are referred to as FICA taxes. Your employer will also match your contributions. The calculations are even tougher in a state like Ohio, where there are state and often local income taxes on top of the federal tax withholding.įirst of all, no matter what state you live in, your employer withholds 6.2% of your earnings for Social Security taxes and 1.45% of your earnings for Medicare taxes. Number of cities and villages that have local income taxes: 848Ĭalculating your paychecks is tough to do (without a paycheck calculator) because your employer withholds multiple taxes from your pay.Median household income: $62,689 (U.S.
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