Author Topic: Tax deductions calculations in paycheck  (Read 468 times)

Jules13

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Tax deductions calculations in paycheck
« on: December 27, 2017, 10:23:05 AM »
This is probably a kinda stupid and easy question.

I am trying to figure out the easiest way to determine how much extra we will take home vs pay in more taxes if I lower my husband's 401k contribution. 

Is there a formula?  I usually just make the change and wait and see what happens.  Lame, I realize.  I don't want to lower the deduction if that money is just going to get eaten up in taxes because our taxable income increases, but we want to travel more so taking home a bit more would be nice for that.  (and yes I realize this is not FIRE friendly but oh well).

Thanks!
Jules

clutchy

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Re: Tax deductions calculations in paycheck
« Reply #1 on: December 27, 2017, 10:30:50 AM »
This is probably a kinda stupid and easy question.

I am trying to figure out the easiest way to determine how much extra we will take home vs pay in more taxes if I lower my husband's 401k contribution. 

Is there a formula?  I usually just make the change and wait and see what happens.  Lame, I realize.  I don't want to lower the deduction if that money is just going to get eaten up in taxes because our taxable income increases, but we want to travel more so taking home a bit more would be nice for that.  (and yes I realize this is not FIRE friendly but oh well).

Thanks!
Jules


It's kinda complex because it can affect quite a few areas.  I'm sure there is a calculator online somewhere.  My work actually has one built in to the HR software. 

as a rule of thumb I've found that my take home usually decreases by 2/3'rds of whatever I contribute.

DS

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MDM

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Re: Tax deductions calculations in paycheck
« Reply #3 on: December 27, 2017, 11:28:30 AM »
https://www.paycheckcity.com/calculator/salary/
Programs such as that will provide the change in "amount deposited into the checking account" per paycheck.

That may or may not be the same as the "actual effect on annual cash flow, after accounting for all tax effects."  For that calculation, one needs tax software that incorporates all tax effects (credits, phaseouts, etc.).

Jules13

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Re: Tax deductions calculations in paycheck
« Reply #4 on: December 27, 2017, 01:41:48 PM »
Thanks.  I figured out some things, so think I figured out enough to do some estimates. 

BrightFIRE

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Re: Tax deductions calculations in paycheck
« Reply #5 on: January 03, 2018, 07:46:06 PM »
This is the best calculator I've found. I know my own pre- and post-tax deductions from looking at pay stubs. https://www.bankrate.com/calculators/tax-planning/payroll-tax-deductions-calculator.aspx