Payroll How-To
How to calculate a paycheck (gross to net)
The order of operations
- 1.Gross: sum every earning line (regular, OT, bonus, PTO payout, retro; reductions are negative)
- 2.Pre-tax deductions: 401(k) and Section-125 reduce the right wage bases
- 3.Federal income tax: Pub 15-T percentage method on FIT-taxable wages
- 4.FICA: Social Security (capped), Medicare, Additional Medicare over the YTD threshold
- 5.State and local income tax on state-taxable wages
- 6.Garnishments: post-tax, CCPA caps on disposable earnings, in priority
- 7.Net: gross minus taxes, deductions, and garnishments
The taxability matrix
| Deduction | FIT | FICA/FUTA | State |
|---|---|---|---|
| Section-125 pre-tax | Yes | Yes | Yes |
| 401(k) elective deferral | Yes | No | Yes |
| Post-tax | No | No | No |
Proving it balances
Paycheck invariant
gross = net + taxes + deductions + garnishments
Fintra asserts this identity (and that no component is negative) before saving. A check that doesn’t balance is never issued.
See the working
Every check stores a trace: each tax’s base, rate, rate-year, YTD-before, and whether a cap applied, so you can explain any number, and an independent reference implementation cross-checks federal withholding to the cent.
Questions people ask
What order are paycheck deductions applied?
Gross, then pre-tax deductions, then federal and FICA taxes, then state/local, then post-tax garnishments on disposable earnings, arriving at net.
Why does a 401(k) deferral not reduce FICA?
Elective 401(k) deferrals defer federal income tax but remain subject to Social Security and Medicare, so they reduce Box 1 but not Boxes 3 or 5.
How do I know the paycheck is right?
Fintra asserts gross equals net plus taxes plus deductions plus garnishments (no negatives) before saving, and an independent reference cross-checks federal withholding.
Can I see how each tax was computed?
Yes: every check stores a trace with the base, rate, rate-year, YTD-before, and cap for each tax component.
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Gross to net, fully explained
Run every check on a traced, balancing engine.