Paycheck question...Florida (1 Viewer)

[Anthony Moore]

Hi,

Just graduated from college and goin to get my first salary paycheck soon.

I am starting at $30,000 a year (i know , not much, but its more than ive ever made!)..

I know im in a pretty small tax bracket, but could someone tell me which one i do fall under? Also, i know there's a FICA tax also. is that a certain percentage?

Im just trying to find out how much I will ACTUALLY be making here, before health insurace and and the other extras.

I also live in Florida, so there is no state income tax.

thanks for any help

 

[Eric_L]

Here is a link:

http://money.cnn.com/pf/101/lessons/18/page2.html

THe forst $7,000 will be taxed at 10%, the next $21,400 will be taxed at 15%, the remaining $1600 will be taxed at 25%.

You likely will also take advantage of the standard deduction, which should lower your taxable income by several thousand dollars. That places you squarely in the 15% tax bracket. You also have social security taxes to pay and your benefits.

I would also STRONGLY encourage you to copntribute to your 401k since it will reduce your taxes by 15 cents per dollar and give you a huge head start in life. Even if it is only $50/month it is a good habit to start now.

Look for your paychech to be about 75%-80% of what you earned. (Think of it as giving all of your money to the IRS until mid-March - it would cost you the same at the end of the year) Then thank heaven for tax cuts! Especially once you start earning more and have a family to support. Only a year ago the taxes started at 15% instead of 10%, and it was once much higher.

 

[Todd Hochard]

Eric is a financial professional, so of course he would give you this advice. But, let me give you some of my own, from an amateur's point of view-

Start putting money into your 401(k) now.

As much as you can tolerate. I'd say at least 10% of your gross. Seriously. Yes, you'll have less to spend, but in a few years, you'll be well on your way to a fat account, and you'll be glad you did. Additionally, when you get around to having kids, you'll likely need to cut this back (I did, since "The Man" hasn't seen fit to give me, or anyone in my company, a raise for a LONG time). So, better to shove a bunch in now, while you have low expenses, AND the best investing asset- TIME- on your side.

EDIT- FICA is 7.65% of your gross, IIRC.

Todd

P.S. "The Man" thing is an inside joke between me and my boss. I stay by choice, in spite of the money thing, because it's good work, and good benefits. Don't pity me.

 

[Joseph DeMartino]

Anthony:

It so happens that I created an Excel file for my nephew, who also lives here in Florida, to keep track of his work hours and he asked me to include a calculator to show estimate his gross, deductions and net. (So that when he ends the day on Friday, he knows what is going to be in the check he gets the next Wednesday.) He makes what you do, and we based the numbers on his first couple of paychecks. (The Federal tax withholding rate actually varies slightly from week to week, because it is based on a projection of what you're going to make for the year. Basically your employer is trying to keep an average withholding rate going to keep up with the rate changes described in the article linked to in the earlier post. That's why if you're an hourly employee and you work overtime, you get taxed at a higher rate - that one week throws off the projection.)

Anyway, as an hourly rate $30K comes out to approximately $14.42. Here's how my nephew's calculator estimates the withholding:

Hrs: 40
Rate: $ 14.42
Gross: $576.80
Fed Tx: $ 57.62 (9.99%)
Disblty: $ 8.36 (1.45%)
Soc Sec: $ 35.76 (6.20%)
Net: $475.05

My nephew tells me that the estimate has never been 100% accurate, but it's also never been off by very much. Usually a matter of pennies, never more than a dollar. So that should be pretty close, although things like 401(k) contributions (which my nephew isn't eligible for) would change that slightly.

In the above example a 20% contribution to your 401(k) ($115.36) would reduce your taxable income to $461.44 and your Federal tax withholding to $46.10. So even though you put $115.36 in your retirement account, your take home pay would only be reduced by $103.84. (Social Security and Medicare withholding is based on your gross salary, only Federal withholding is based strictly on your taxable - post-401(k) - income, so those deductions don't change.)

Regards,

Joe