Your Paycheck: Key Parts
- Gross pay: Total before taxes/deductions.
- Net pay (take-home): What you receive after deductions.
- Federal income tax: Withheld based on your W-4.
- State/local tax: Depends on where you live.
- FICA: Social Security + Medicare contributions.
- Other deductions: Health insurance, retirement (401k), HSA, union dues.
Tip: If your take-home pay seems low, check pre-tax benefits and withholding settings.
Common Tax Forms
- W-4: You fill this for your employer to set withholding.
- W-2: Employer sends by January; shows wages & taxes withheld.
- 1099-NEC/1099-K: Self-employed/contract income (no withholding).
- 1040: Main federal tax return you file each year.
Keep your address updated so forms arrive on time.
Filing Your Taxes (Basics)
- Collect W-2s/1099s and receipts (charity, education, childcare).
- Use e-file software or a preparer; choose standard deduction or itemize.
- Credits can increase refund (EITC, Child Tax Credit, education credits).
- Deadline is usually mid-April; file an extension if needed (pay estimates to avoid penalties).
Adjusting Your W-4
If your refund is very large or you owe every year, adjust your W-4:
- Increase withholding → bigger paycheck later, smaller paycheck now.
- Decrease withholding → smaller refund, more take-home each paycheck.
- Revisit after life changes (marriage, child, second job).
Mini Exercise
- Open your last paystub. Identify gross pay, FICA, and net pay.
- List any pre-tax deductions (health, 401k). How do they change net pay?
- Decide: keep your W-4 as is or adjust it this year?