# Calculating Net Income?



## ChristopherPaul (Feb 17, 2006)

How can I get a close estimate of what my take-home pay will be when considering different gross incomes?

I try backing into what the current percentages are from my current paycheck, but there always seems to be variables that effect the accuracy.


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## ChristopherPaul (Feb 20, 2006)

Does anyone know what the different taxbrackets are for each state?


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## CalsFarmer (Feb 20, 2006)

you need some tax tables...go on the internet

Are you working 1040's or state tax?


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## tcalbrecht (Feb 20, 2006)

> _Originally posted by ChristopherPaul_
> How can I get a close estimate of what my take-home pay will be when considering different gross incomes?
> 
> I try backing into what the current percentages are from my current paycheck, but there always seems to be variables that effect the accuracy.



You net income (after taxes) will be affected by several factors:

- Gross income
- Allowable deductions (dependents, itemized)
- State taxes issues (flat/graduated)
- Local income taxes that may be taken from your pay

Your net income is what defines your effective federal tax bracket. That's where the percentage comes from that identifies how much is withheld.

If you want the gory details, visit http://www.irs.gov/pub/irs-pdf/p15.pdf


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## Semper Fidelis (Feb 20, 2006)

Yeah, it's pretty hard to just guess. If you're married with a number of kids, a house payment, and you tithe then your net income could be close to your gross income. If you're single, without a home, then you normally do better using the standard deduction even if you tithe.

When you file this year you should be able to estimate next year's taxes in your software you use. You could also use a tax software program and prepare a hypothetical return. Keep all the variables (deductions, etc) constant but go back and enter different gross income amounts to determine your net income.


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## ChristopherPaul (Feb 21, 2006)

Thanks, my objective is to estimate net income based on a different salary in a different state.


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## ChristopherPaul (Feb 21, 2006)

This is where it gets confusing to me. Based on the 2006 tax table, I should be deducting 25% for federal and 6.85% for state.

But when I calculate what actually gets deducted from my gross it calculates to about 19% federal and state combined.

And when I calculate my annual income taxes I usually get a substantial amount returned.


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## ChristopherPaul (Feb 21, 2006)

Sorry, for the multiple posts. 

The standard deductions are what I am failing to figure. Tracking all these numbers down is the trick.


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## Dan.... (Feb 21, 2006)

CHris, 

I noticed from your sig. line that you have 4 children, correct? Are you subtracting the child tax credit at $1000 per child? If you receive a $4000 tax credit deducted directly from the amount of taxes you owe, then you are probably not paying anywhere near 25%.


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## tcalbrecht (Feb 21, 2006)

> _Originally posted by ChristopherPaul_
> This is where it gets confusing to me. Based on the 2006 tax table, I should be deducting 25% for federal and 6.85% for state.
> 
> But when I calculate what actually gets deducted from my gross it calculates to about 19% federal and state combined.
> ...



Remember, the amounts in the tax tables are after deductions, etc. 

By way of example, if your gross income is $75K, and you have $25K in deductions, your taxable income falls to $50K That would place you in the 15% bracket. 

How many allowances have you listed on your W-4 form? Did you ask for any additional amount to be withheld? That's really what drives your withholding at the Fed level.


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## ChristopherPaul (Feb 21, 2006)

> _Originally posted by tcalbrecht_
> 
> 
> > _Originally posted by ChristopherPaul_
> ...



Good point, I keep forgetting that.

It has been a while since I updated my W-4. I know I have had more children since the last time.


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## ChristopherPaul (Feb 21, 2006)

> _Originally posted by Dan...._
> CHris,
> 
> I noticed from your sig. line that you have 4 children, correct? Are you subtracting the child tax credit at $1000 per child? If you receive a $4000 tax credit deducted directly from the amount of taxes you owe, then you are probably not paying anywhere near 25%.



Does anyone know where to find the exact deduction per child? In 2002 it was $3000. But I think there may be a maximum, so someone who has 8 children have the same deduction as someone with 4.

The filing jointly deduction is $10,000, but I can't find the exact amount per child.


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## Dan.... (Feb 21, 2006)

(Not to be taken as tax advice, but only as an example of how deductions, exemptions and credits can be very helpful)
Example:

Let's say your gross income (1040, line 38) is $70,000
Let's say your itemized deductions total $15,000.

You claim 6 exemptions (you, your spouse, and all 4 children)on line 6d on IRS1040 6 x 3200 =19,200

70,000-15000-19200 = $35,800 This is your taxable income.
Accoring to the IRS tax table ( http://www.irs.gov/pub/irs-pdf/i1040tt.pdf ) your tax is $ 4644. (This assumes that you do not have to add other taxes, such as self employment or capital gains)

Then, assuming your children are young and live with you, you get to subtract an additional $4000.00 as a child tax credit. (Line 52 of 1040. Make sure you check with the 1040 instructions, pg 41 on Child Tax Credit to verify that you qualify) This makes your tax now *$644.00*






[Edited on 2-21-2006 by Dan....]


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## Anton Bruckner (Feb 21, 2006)

You guys are good.


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## ChristopherPaul (Feb 21, 2006)

> _Originally posted by Dan...._
> (Not to be taken as tax advice, but only as an example of how deductions, exemptions and credits can be very helpful)
> Example:
> 
> ...



Dan, this helps a lot, thank you!

I had to find the right forms to get the information. Basically, to calculate Net income one must look to the 1040 and the tax tables. Makes sense.

So after all this, I figured out that my company is witholding too much from my paycheck.

That fact doesn't help much in estimating net income based on different salaries in different states. If I were to estimate my net income based on my current job, location, and salary, I would come up with an inaccurate estimate. OR perhaps I need to update my W-4.


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## ChristopherPaul (Feb 21, 2006)

> _Originally posted by Slippery_
> You guys are good.



Aren't puritans great!


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## Puritanhead (Feb 21, 2006)

Add the employers matching contribution on FICA/OASDI-- about 7.5% to your gross, and than you can start to fathom how much the government truly screws you out of your money. That doesn't account for the regulatory costs to the economy, and redistribution through the frivilous tort system.

Most economists agree taxes borne by businesses are passed onto consumers in the form of higher prices and workers in the form of depressed wages.

For more groveling about Uncle Sam, read my latest blogspot.


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## ChristopherPaul (Feb 21, 2006)

> _Originally posted by Puritanhead_
> Add the employers matching contribution on FICA/OASDI-- about 7.5% to your gross, and than you can start to fathom how much the government truly screws you out of your money. That doesn't account for the regulatory costs to the economy, and redistribution through the frivilous tort system.
> 
> Most economists agree taxes borne by businesses are passed onto consumers in the form of higher prices and workers in the form of depressed wages.
> ...



No thanks Ryan.

This is a practical question, not a political one.

Please start a new thread if you wish to "grovel about Uncle Sam".


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## Dan.... (Feb 21, 2006)

Here is an intersting table for *approx.* how much an employer should be witholding on your weekly/bi-weekly/monthly, etc... paycheck, for federal taxes, based on the exemption level (S-0, S-1, S-2, M-1, M-2, etc...) you claim on your W-4:

http://www.irs.gov/pub/irs-pdf/p15a.pdf 

(Start on page 27)

[Edited on 2-21-2006 by Dan....]


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## Dan.... (Feb 21, 2006)

As for the state taxes? Who knows... If you plan to move to Illinois, expect to pay 3% state income tax. (Also, If you plan to move to Illinois, I can recommend a good church!  )

[Edited on 2-21-2006 by Dan....]


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## Dan.... (Feb 21, 2006)

Also, when figuring out your net take-home pay, don't forget to subtract for FICA http://money.cnn.com/pf/101/lessons/18/page3.html , estimated health insurance (which is variable) and any other deductions (like 401K).

[Edited on 2-21-2006 by Dan....]


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## Anton Bruckner (Feb 21, 2006)

> _Originally posted by ChristopherPaul_
> 
> 
> > _Originally posted by Slippery_
> ...


they're a dangerous religious sect that must be vanquished at all costs. The read deep books and think for themselves. This make them uncover the lewdness of social, political and religious leaders, as well as the lewdness of the general population. They thus threaten the very structure of society since they are hell bent on holiness and integrity. They threaten Football which is played on a sunday, they threaten the entertainment industry that produces amoral and immoral movies, they threaten our public school system, since they demand Godly education, they threaten evangelicalism, thereby putting Benny Hinn's million dollar salary in great jeopardy, the oppose divorce thereby threatening the $2 billion dollar divorce industry.

Puritans aren't great, they are treasonous, very treasonous, and very destructive. They don't wage battle with swords or bombs, but with knowledge, by which they seduced the godless, and gradually change their lives to a puritanical pursuit, making them love God, and family. 

[Edited on 2-21-2006 by Slippery]


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## ChristopherPaul (Feb 21, 2006)

> _Originally posted by Slippery_
> 
> 
> > _Originally posted by ChristopherPaul_
> ...





Well played, so true.


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