Question

How do you calculate take-home pay?

A. Gross income – [% income tax • (gross income – 401(k) deduction)] – other deductions
B. Pretax income • (FICA + % income tax) – other deductions
C. Pretax income – optional deductions – required deductions
D. Gross income – pretax income – other deductions

Answer 1

To calculate take-home pay, you subtract deductions and taxes from your gross income. The formula for calculating take-home pay is Gross income – [% income tax • (gross income – 401(k) deduction)] – other deductions.

Step-by-step explanation:

To calculate take-home pay, you need to subtract deductions and taxes from your gross income. The correct formula is option A: Gross income – [% income tax • (gross income – 401(k) deduction)] – other deductions. Let's break down the formula:

• Gross income: This is the total amount of money you earn before any deductions or taxes are applied.
• % income tax: This represents the percentage of income tax you have to pay, which is typically a percentage based on your income level.
• 401(k) deduction: If you contribute to a 401(k) retirement plan, this deduction is taken out before income tax is calculated.
• Other deductions: These are additional deductions that may be taken out, such as healthcare or insurance premiums.

By subtracting these deductions and taxes from your gross income, you will arrive at your take-home pay, which is the amount of money you actually receive in your paycheck.