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advisersgiveback.org
Understanding
Learn how to read your paycheck and make smarter money decisions
Your Paycheck
And Taxes
Presented by:
Vidalia Cornwall, CFP®
Duration: ~20 minutes + Q&A
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Why This Matters
Why Understanding Your Paycheck Matters
Your paycheck = your financial foundation
Know where every dollar goes
Avoid
tax surprises
Make informed financial decisions
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Anatomy
Of A Paycheck
Gross Pay
Taxes (Federal, State, Local)
Deductions (Benefits, Retirement)
Net Pay
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Based on IRS tax brackets
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Determined by your W-4 form
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Adjusts for dependents, status, and other income
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Too high → refund later; too low → tax bill later
04
Income Tax
Federal
Withholding
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FICA:
Social Security
& Medicare
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Social Security: 6.2% (up to wage limit)
02
Medicare: 1.45% (no limit)
03
Employer matches both
04
Funds your future benefits
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State &
Vary by location
Some states have no income tax
Check local rates and withholding options
Local Taxes
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Benefits
& Deductions
Health, dental, vision insurance
Retirement contributions (401(k), IRA)
Flexible spending or HSA accounts
Pre-tax vs. after-tax deductions
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Reading Your Pay Stub
Understanding Your Pay Stub
Year-to-date (YTD) totals
01
Hours worked, rate of pay
02
Withholdings and deductions summary
03
Employer contributions
04
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Why did my paycheck change?
What’s the difference between gross and taxable income?
Should I claim more or fewer allowances?
Where does my refund come from?
Common Paycheck
Questions
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How To Adjust Withholding
Update your W-4 anytime
Use the IRS Withholding Estimator
Life events = time to revisit (marriage, kids, new job)
Aim for “break even” — no refund, no balance due
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02.
Consider direct deposit into multiple accounts
01.
Set up automatic savings or 401(k) contributions
03.
Review benefits annually
04.
Align paycheck timing with bill due dates
Smart Paycheck Moves
Beyond Taxes
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Category
Federal Tax
FICA (SS & Medicare)
State Tax
401(k) Contribution
Health Insurance
$120
$76.50
$50
$50
$75
12%
7.65%
5%
5%
7.5
Net Pay
$628.50
62.85%
Amount
% of Paycheck
$1,000 Go?
Where Does
Quick Example
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Takeaways
Key
Know what’s on your pay stub
Review your W-4 annually
Track pre-tax vs. after-tax deductions
Use your paycheck as a financial planning tool
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Take Control of Your Paycheck
Calls To Action
Review your next pay stub
Check your W-4 with the IRS estimator
Meet with a CFP® for a holistic personalized review & get a plan
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