1. What is Net Pay Calculation?

The net pay calculation determines your take-home pay after accounting for salary, dividends, and all applicable taxes (federal, state, FICA, and dividend taxes). It provides a comprehensive view of your actual earnings.

2. How Does the Calculator Work?

The calculator uses the following equation:

Where:

• \( \text{Salary} \) — Annual salary income
• \( \text{Dividends} \) — Annual dividend income
• \( \text{Federal Tax} \) — Federal income tax amount
• \( \text{State Tax} \) — State income tax amount
• \( \text{FICA} \) — Social Security and Medicare taxes
• \( \text{Dividend Tax} \) — Taxes on dividend income

Explanation: The equation sums all income sources and subtracts all tax obligations to determine actual take-home pay.

3. Importance of Net Pay Calculation

Details: Understanding net pay is crucial for financial planning, budgeting, and understanding your true earnings after all tax obligations.

4. Using the Calculator

Tips: Enter all values in USD. Include all applicable taxes for accurate results. Values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's included in FICA?
A: FICA includes Social Security (6.2%) and Medicare (1.45%) taxes, typically withheld from wages.

Q2: How are dividend taxes calculated?
A: Qualified dividends are taxed at capital gains rates (0%, 15%, or 20%), while ordinary dividends are taxed as regular income.

Q3: Should I include 401(k) contributions?
A: This calculator shows post-tax income. Pre-tax deductions like 401(k) would reduce your taxable income but not appear here.

Q4: What about other deductions?
A: This calculator focuses on major tax items. For comprehensive analysis, include health insurance, retirement contributions, etc.

Q5: How accurate is this for self-employed?
A: Self-employed individuals have additional tax considerations (self-employment tax) not fully accounted for here.