How to Count How Much Money the Income Got Cut After Taxes
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How to Count How Much Money the Income Got Cut After Taxes

The sum of money that comes out of a paycheck to pay taxes adds up to change the income earned with productive work to an amount that pays for the labor at a low price. But, an additional amount might raise the income loss even higher. Know how to add up the lost income.

Every paycheck the employer uses payroll money to pay taxes. Money that Americans can not take home.

The company owes its workers only some of the money earned by work. The income cut can be added up using employment records.

1. Start with the W-2 Wage and Tax Statement.

There are amounts stated for three kind of taxes withheld from the year's paychecks. The federal income tax the IRS takes is on line 2. The money put aside until work is done and retirement starts is on line 4, the social security taxes amount.  The health care that gets paid for using Medicare depends on the work earnings taken out and stated on the next line below on the W-2, line 6.

Wages, tips, and other compensation on line might seem to be more than enough until the taxpayer looks at the liens that tell them the dollars and cents they did not get. Money that no one will want to just forget about.

2. Look at the bottom line on the W-2 to find out how much the state took in income tax. The amount is stated in box 17.

3. Look over the adjustments box, or area, on the pay stubs kept for a year's work. Many employers list the money taken out.

There is one more tax amount the employer has to pay that might prevent them from giving their employee a raise. The money is put into a fund that finances the federal unemployment insurance system.  Americans that lose their job though no fault of their own can take a share of this money in an unemployment check they get in hand during the time spent out of work.

The letters FUTA on the stub tell a worker the dollar amount state next to them is the Federal Unemployment Tax Act amount.

4. Add up all the tax money not paid for icomne. The minuses can add up to a lot. One fourth to a third the pay stated on the W-2, or more, taken by the IRS for income tax. Social security dollars and Medicare dollars are not useful until a later day. Today, the tax withholding limits the take home pay more than a small amount.

Adding the unemployment tax can leave an American with nothing left to take a cruise vacation.

5. Put the income loss on record.

The records show how much the things done at work really earned. The full income is the take home income plus the lost income.


IRS, Publication 15: Employer's Tax Guide, Circular E (2012).

IRS, Form W-2 (2012).

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