Paychecks, taxes and paperwork
Understand every line between your wage and your wallet.
Paying what you owe, including taxes, is part of living honestly. Understanding it is part of doing it well.
Romans 13:7
Where the money goes
Gross pay is what you earned. Net pay is what lands in your account. The gap is deductions: federal income tax withholding, state tax, Social Security (6.2%) and Medicare (1.45%), plus anything you chose, like health insurance or a retirement contribution. Seeing a $15/hour job turn into about $12.50 take-home is normal, not a mistake.
Withholding is a guess
The tax taken out of each paycheck is an estimate based on the W-4 you filled out. Withhold too little and you owe money in April. Withhold too much and you get a refund, which is your own money returned without interest. A refund feels like a win but is really a forced savings account that pays zero.
Key terms
Gross pay: Total earnings before any taxes or deductions.
FICA: The Social Security and Medicare taxes taken from each paycheck.
This week's money move
Read a pay stub like an adult
0 of 4 done
Week 4 check
3 questions · no grade, just a gut check
1. A large tax refund usually means…
2. FICA funds which programs?
3. As a self-employed worker, you should…