Update (3 January 2006): A new tool for determining tax withholding from your paycheck for 2006 is now available!
As in every year since 1913, 2005 promises to offer a lively discussion of how income taxes impact the daily lives of people in the U.S. As such, I'm pleased to present Political Calculations' first major contribution to that ongoing discussion in the blogosphere, which I hope will help form a base for points of future reference:
Your 2005 Paycheck Estimator
This tool will determine the amount of U.S. Federal Income, Social Security and Medicare taxes to be withheld for wages and salaries earned in 2005, as determined through the percentage method outlined in the IRS's Employer's Tax Guide (Publication 15 Circular E, which is available online as a 373.1K PDF document. The paycheck estimator also takes into account the amount of pre-tax 401(k) or 403(b) plan contributions you make as well as your pre-tax flexible spending account contributions for health care and dependent care expenses before figuring the amount of taxes to withhold. This tool will also determine the net amount of pay left over after all these income "extractions". You can even see what your paycheck will look like after a raise! Best of all, there's no relationship with that Ben Affleck movie, so you're already coming out ahead....
There are other such paycheck calculators on the Internet - most notably at PaycheckCity.com, H&R Block or at Turbotax (Canadian version here). Of these tax calculating resources, the most up-to-date tools are available at PaycheckCity.com, especially if you also need to determine the amount of state income tax withholding that will be taken out of your paycheck.
Of course, if you live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington or Wyoming, you either have no state income taxes or you have no state income tax withholding requirements, and the paycheck estimator above will provide you with something near your actual take-home pay.
Update: Welcome Carnival of the Capitalists readers!
P.S. Thank you to the fine folks at Roth & Company for linking the 2005 Paycheck Estimator. Also, for those seeking the services of a good CPA, the Roth & Co. folks have posted some valuable advice on their blog.
Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:
ironman at politicalcalculations
Thanks in advance!
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