I've been living and working abroad for a number of years but am planning to return to work in the US. I'm trying to figure out if I will be able to live on a teacher's salary. They are so low that every dollar counts. I've determined that if social security (teacher retirement) is withheld before income tax is figured, there is a difference of around $100 a month in take-home. But I can't remember how it works.
Is the federal income tax withheld first, then social security? Or are they both determined based on the gross salary? What about state income tax? Is it based on gross or net after federal and social security?
Thanks.
Is Social Security pre-tax, post-tax, or simultaneously taken from the base salary?
Social Security and Medicare taxes are based upon your gross income. If you are making tax preferenced contributions to a qualified retirement plan you will pay SS and Med tax on those contributions even though you won't pay income tax on them.
Income taxes are based upon your gross income after subtracting any qualified retirement plan contributions and Section 125 deductions such as healthcare insurance, dental insurance, and cafe plan deductions for such things as unreimbursed medical costs or dependent care costs.
Keep in mind that if you receive any pay over and above your base pay such as for experience, education, specialzed skills, etc. that is ALL considered taxable income and will be added to your base to arrive at your gross pay for tax purposes.
Reply:All taxes are based on your gross,
less health care, less retirement funds...
So if you make $30K you subtract your health insurance say $1750 and then you subtract your retirement say $3000.
then you are taxed on the remaining...
Reply:Social security, medicare, and federal income tax are all taken out post-tax - in other words, they aren't deducted from your salary before taxes are calculated. SS and medicare are based on gross salary. Federal income tax is based on gross salary minus pre-tax deductions like 401K, and possibly medical insurance and flex spending plan contributions..
Reply:If you work as a public school teacher, you will be among the few that don't pay social security. If you teach in private school you will pay social security and income tax from your post tax loweer than public school teacher salary.
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