Question

what are the calcualtions that go into determining an employees pay for each period? what taxes must be paid? are there other items which impact paychecks? what are they?   

Answer 1

The calculations that go into determining an employees pay for each period are calculations with regards to gross wages and salaries, pre-tax withholdings, employee only taxes and deductions like voluntary and involuntary deductions. To the net amount as determined above reimbursements are added back in. Thus the formula is: Net pay = Gross pay – taxes – deductions + reimbursements.

The taxes that must be paid are federal income tax, state tax, city and local tax, and other taxes like social security tax and medicare tax.

Other items that impact paychecks are items that are called after-tax paycheck deductions. They are taken out after tax is deducted. These include things like union dues, charitable donations etc. Then there are wage garnishments. These are court-ordered withholdings and in some cases court of law orders wages of some employees to be withheld to fulfill bad debts, alimony, or child support payments, and it’s the employer’s responsibility to withhold these funds.