1. What Affects Income
b. How can you increase the money you bring home (continued)Other compensation from your employer
To get a complete picture of your financial health at this point, let’s look at other forms of compensation
that you might get from your employer that don’t show up as money in a paycheck or as net pay. Called “employee benefits” these are certain things of value that you receive in addition to wages or salary.
For example, your employer may have negotiated with a health insurance
company to insure all of the company’s employees for a specific per person rate. That rate will likely be lower than what you would pay if you had to purchase the health insurance
on your own because the employer has better buying power since he represents a large group. Usually, companies and their employees share the cost of health insurance
after the company has negotiated the rate.
Additionally, your employer may provide limited disability and life insurance
benefits at no cost to you. These benefits, sometimes purchased as part of the health insurance
benefit, are less expensive when purchased for a group than they would be if you purchase them individually for the same reason noted above.
The company or employer must also pay insurance companies for Worker’s Compensation
insurance in the event you are injured on the job.
Many employers allow their workers some paid time off in the form of holiday pay, vacation, or sick pay. The company pays for the time off but you aren’t there producing the work so it is an expense
for the employer and a benefit to you. Some employers include a meal for every shift you work or a uniform without cost to you. Bus passes or tickets to entertainment events are other examples of compensation
not on your paycheck.
Retirement account contributions
Some employers match your contributions to a retirement account (more on retirement accounts later.)
All of these expenses are paid for by the company in addition to your hourly wage or salary. Free coffee in the break room and “knocking off early on a Friday” while still being paid are all expenses for the company and compensation
The company or employer often uses the term “total compensation” because these costs may increase the bottom line expense to the company for each employee. If you had to pay for all of these benefits, you would have to earn more money, pay additional taxes on that income in many cases, and then pay many of these costs with after tax dollars out of your pocket. When you look at total compensation, be sure to consider all of the company provided benefits like matching contributions to a retirement account, reimbursement for education expenses, employee discounts, paid vacation and sick days, and the value of health insurance.
Payroll taxes withheld, employee benefits, employer costs and voluntary deductions
In the U.S. we pay income taxes on money as we earn it so these taxes are deducted with every paycheck. This money is withheld from your paycheck before you get it. The year to date (YTD) column shows how much has been deducted so far this year for that particular category. You might be able to reduce some of the payroll taxes you pay by making contributions to a retirement plan that your employer sponsors or by contributing to a health savings account – you can ask your employer about these options.
Hourly paycheck calculator
Hourly Paycheck Calculator
Use this calculator to help you determine your paycheck for hourly wages. First, enter your current payroll information and deductions. Then enter the hours you expect to work, and how much you are paid. You can enter regular, overtime and one additional hourly rate. This calculator uses the 2016 withholding schedules, rules and rates (IRS Publication 15).
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