When anyone first gets a paycheck that is actually from doing work for an employer in a business, the paycheck will be smaller than what you would’ve first thought. Now you might go railing at the employer, but really it’s the government’s fault.
The government forces you to pay two different income taxes, plus finance two broke and broken organizations known as Medicare and Social Security. The two income taxes are the ones that are on the federal and state level.
The other two reasons why your paycheck is smaller is a voluntary choice made by you. These are the insurance and retirement contributions.
There are also two forms that you have to fill out, and one is the W-4 Form. This form is received by you from the employer, so that he/she withholds the correct amount of money from your paycheck to fork over to the government.
The W-2 Form is received from the employer showing what you earned and what was withheld in taxes. This is the form that you report to the IRS.
Another vocabulary term that you should know is gross pay. This is the amount of money that you should be getting, before all of the taxes get deducted from it.
Net income is the actual amount of money that ends up in your pocket.
The Blogger 
Leave a comment