A payroll calculator can readily calculate the hours worked as well as overtime hours that are calculated on established wage and thus allow an employee to estimate his or her earnings for a particular month. It does not matter whether it is a weekly or bi-weekly or monthly paycheck that is being calculated for the Payroll Calculator will be able to determine the paycheck for any payment period. There are many features to a payroll calculator and these may include 3 Multi-pay Rates, Bonuses and Tips, Deductions, Vacations, Holidays and Sickness allowances. The payroll calculator can also print out reports that list the number of hours worked, overtime hours, as well as total net pay and this printed report may be used to sort out any differences between the actual payroll and the calculated amounts as determined by the payroll calculator.
There are other advantages to using a payroll calculator to determine earnings and that is it can draw a line graph indicating pay earned over a period of one year and can also display the highest, lowest as well as average earnings. It is also possible to have more than one job and have the payroll calculator's job profile to make separate files of calculations for each different job worked. In addition, the job profiles can be exported to HTML format, Excel format as well as Comma Delimited format for other spreadsheet programs.
One can also use the payroll calculator to help find out the impact of making changes to one's payroll deductions. By entering the current payroll information and deductions one can compare them to the intended deductions. One can also change withholdings, file status or retirement savings and see how the payroll calculator informs you about their impact on the take home pay. There are a number of definitions that should be understood before using the payroll calculator and these include pay period,
gross pay, filing status, number of allowances, 401(k)/403(b) plan withholding, state and local taxes, post-tax deductions, post-tax reimbursements, FICA OASDI, FICA Medicare, and Federal tax withholding calculations.
The pay period refers to how often a person is paid and could be weekly, bi-weekly, twice a month or monthly or annually. Gross pay is the pay calculated and which does not make any deductions for a particular period. Filing status is the income tax filing status and could be either single or married. At the time of calculating Federal income tax withholdings one is allowed to claim allowances to reduce the amount of Federal income tax withholding. The 401(k)/403(b) plan withholding is the percentage of gross income that is placed into a taxable deferred retirement account such as 401(k) or 403(b). State and local taxes are the percentage that is deducted for state and local taxes. Post-tax deductions are those payroll deductions made by the employer after income tax.
Post-tax reimbursements are those reimbursements made by the employer after tax. FICA OASDI is calculated by multiplying 6.2% of the gross earnings. FICA Medicare is calculated by multiplying 1.45% to the gross earnings. While calculating Federal tax withholdings one has to multiply taxable gross wages by the number of pay periods per year thus computing the annual wage. Then the value of allowances allowed are subtracted and to determine annual tax one has to make use of tables that pertain to either single and married income tax payees and finally, dividing the tax amount by the number of pay periods will give the amount of Federal withholding tax that should be deducted each pay period.
Using the payroll calculator is a cheap, quick and efficient way of determining wages earned and is also useful in calculating the net paychecks. The payroll calculator is most suitable for showing the employee's multiple withholding tax scenarios and helps in making informed decisions.
Author Resource:-
Wade Anderson is a CPA and operates DigitalWorkTools.com
Click to view a Payroll Calculator
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