I’m looking for a new apartment, but it’s kind of hard for me to figure out what I’ll be able to afford, because I’m not sure what my paycheck will be after taxes.
Let me explain: Right now I have a temporary job at a newspaper that will soon become a permanent job. This brings with it a LOT more money. So, I’m looking for some new digs fitting my new level of wealth.
I figure I’ll make $36,000/year. That comes out to about $692/week BEFORE taxes. I realize there are state and city taxes I have to worry about, but does anyone know how I figure out what the feds will take out of my check?
Take 35% of your yearly salary, and that’s about what
you’ll pay in Federal taxes per year. Might be a little
high if you’re poor, or a little low if you’re rich, but
that’s pretty close for most people.
For you, this is 35k * .35 = 12,600 per year. (Yes,
that is a lot of money. Bow down before the government
that owns you.)
Divide by 52 for weekly deductions: 242 a week in
taxes. You were taking home nearly $700/week before
the IRS fucked you. Now you’re taking home $250 less,
or about $450/week. Your employer will conveniently
take this out of your paycheck automatically so you
don’t even have to see how badly you’re being screwed.
So your monthly income is about 4 * $450 = $1800.
Now start subtracting expenses. How much is your car
payment? Car insurance? How much do you spend on food in
a week (don’t skimp on this one). How much does your telephone, cable TV and net connection cost you? Do
you eat out or go to movies fairly regularly? How
much does gasoline cost you per month. Etc, etc, etc.
Do the math and see what you can swing. I would
advise you not to spend nearly all the money that’s
left on rent, however. Unexpected expenses always
crop up. Car repairs, new clothes when your old ones
wear out, dates (hopefully), etc.
Also remember that the first month you move in you’ll
get double-whammied by damage deposit and first month’s
rent. Beest to have double your rent around in your
checking account before you move to the new place.
-Ben
P.S. Frightening how few American can actually do this math…
35% is nowhere near what he’ll pay in federal income taxes. In 2001 for singles, the rate (on taxable income, mind you) is 10% on the first $6,000 of income, and 15% on the next $21,050 of income (if the source I found on the Internet is to be believed–I’m not at the office). On the off chance that a salary of $36,000 will lead to taxable income of over $27,050, the excess would be taxed at 28%. Thus, the effective federal rate is most likely below 15%. Add your social security of 7.65% or whatever it is these days, and your state income tax, and unless you’re living in New York City or several other selected urban areas, you’re below 30% total.
Frightening how few Americans know anything about their taxes…
For a paycheck of $692/week, your weekly federal tax withholding will be $75.15 + 27% of the amount over $552, or a total of $112.95 / week. If your payroll department uses tables, the amount would be $114 (per publication 15-T, issued June 2001).
Note that the above assumes you are claiming zero exemptions. For every exemption you claim on your W-4, subtract $55.77 from your gross. Thus, if you claim, for example, 2 exemptions, you taxable gross would be $580.46, so your total federal withholding would be $82.83 / week.
Also note that the above assumes you are single.
Again, see the IRS’s publication 15-T if you want to see all the gory details.
I don’t have my employer’s tax table’s handy, so using the numbers supplied for FITW by Darwin’s Finch and adding in the FICA and Medicare 7.65% we see a total deduction of (52.94 + 112.95) $165.89 per week, or $8626.28 (~24%) per year, exclusive of any state and local taxes. This leaves a net of $526.11 per week, exclusive of any state and local income taxes.
ModernRonin2’s numbers above may not be far off the mark if state and local income tax, gasoline tax and sales tax are taken into account (in fact, they may be low), but for budgeting purposes all you need to add in to the above are state and local income taxes, which are probably deducted from your gross.
I can give you the quick and dirty from my pay check. I make 35,300 close enough.
I get 165 for Feds
84 for FICA
20 for Medicare
97 for MD taxes
plus a couple of other small ones that total 383 for two weeks. I end up with 970 every two weeks, should be close enough for you. that’s without anything else being taken out like 401 or insurance.
After computing federal tax, Social Security and Medicare (all three totaling $152), state tax ($26) and city tax ($9), my once triumphant paycheck of $692 has been whittled down to…
$505… Someone please tell me I’m totally wrong, even though I fear I’m not. 38 percent of my income… gone! And this is after a cut in taxes??