Most employers quote salaries in terms of hourly or yearly rates. So, how do you know how much you earn annually if your income is in the form of an hourly rate? That too should be a major concern if you intend to convert your salary into daily, weekly, or monthly payments.
Due to the consideration of tax, converting annual pay into your monthly salary is not as simple as it seems. You cannot simply divide your annual income by 12 to get the monthly rate. Doing so disregards key elements such as withholding tax.
That’s where a paycheck calculator comes in. It can help you quickly determine how much you should earn within a given period without necessarily doing mind-boggling calculations. Enter the required figures and rates and get the results pronto.
How to Use a Paycheck Calculator
Our free online paycheck calculator is easy to use. You don’t have to be a gifted mathematician to use it. By entering the right figures, adjusting rates on a slider, and checking certain boxes, you’ll get all answers to your queries. It displays the results in terms of annual, monthly, weekly, daily, or hourly wages.
Here’s how to use our free paycheck calculator in simple steps:
Step 1: Enter the Number of Weekly Hours Worked
First, you must use the slider on our calculator to determine how long your work week is. Typically, if you work eight hours a day for five days, your weekly hours worked will be 40 hours. For some people, the figure could be less than 40 hours.
Therefore, soon after opening our paycheck calculator, toggle the slider to the number of hours you work in a week. For the sake of this example, we’ll slide it to 40 hours a week.
Step 2: Choose the Calculation Method
Our paycheck calculator has two calculation methods – Enter Annual Salary or Enter Hourly wage. You can select any of the options based on the wage rate as stated by your employer. If your employment contract states you in terms of an annual salary, choose the first option. Otherwise, pick the second option.
If you choose Enter Annual Salary, you’ll see a field in which you must enter your annual salary. On the other hand, if you select Enter Hourly Wage, you’ll see a field in which you must enter your hourly wage.
For this example, we chose Enter Annual Income and inputted $40,000 in the Annual Salary field. The second option involved us entering a $20 hourly wage in the Hourly Wage field by selecting Enter Hourly Wage.
Step 3: Choose Whether or Not to Calculate Average Net Income
Next, you should choose whether or not you wish to Calculate Average Net Income. The calculator provides Yes and No options with checkboxes. Check the appropriate box. If you select No, the calculator will display annual, monthly, weekly, daily, and hourly income in the Paycheck Calculation section.
On the other hand, if you select Yes, the calculator will display annual, monthly, weekly, daily, and hourly income together with total income and annual net income.
Step 4: Check Results in Paycheck Calculation
On our calculator, the Paycheck Calculation section displays the results, depending on the option you selected in the previous step. If you selected No, you should be able to see results for annual, monthly, weekly, daily, and hourly income.
Based on our example involving a $40,000 annual income on a 40-hour work week, the results figures will be an annual income of $40,000, a monthly income of $3333.33, a weekly pay of $769.3, a daily wage of $109.89, and an hourly wage $19.23.
If you select the $20 hourly wage and choose not to calculate net monthly income, the calculator will display different results. You should see an annual income of $41,600, a monthly income of $3,466.67, a weekly wage of $800, a daily wage of $114.29, and an hourly wage of $20.
However, if you had selected Yes, the calculator will display Total Income Tax and the Annual Net Income together with the other figures. For example, with a $40,000 annual income in a 40-hour working week, you’ll get a total income tax of $5,680 and an annual net income $34,320.
On the other hand, you may select the $20 per hour on a 40-hour working week option. If you choose to calculate net income, you’ll get a total income tax of $5,907.20 and an annual net income of $35,692.80.
Benefits of an Online Paycheck Calculator
An online paycheck calculator comes with several benefits, mainly due to its simplicity. Plus, it breaks down your income in ways that are not possible by stating one figure. A paycheck calculator also lets you know how much income tax you must pay. Here are reasons why you should use it often:
Simple to Use
Our calculator is easy to use. Simply enter the number of hours in your work week, your annual income, or hourly wage, select whether or not to calculate average income, and wait for results. It takes a split second to get the figures you want.
Breakdown of Income
The calculator breaks down your income in terms of possible payment periods. For example, if you input the annual income, the calculator will display it in terms of the monthly, weekly, daily, or hourly wages. That’s also true for the hourly wage, which is aggregated to the daily, weekly, monthly, and annual salary.
Displays Income Tax
Many people have no idea how much income tax they pay since the employer withholds and pays it to the government. With the help of our paycheck calculator, you can know the tax you must pay annually. It uses the prevailing tax rates to arrive at this figure. In 2022, the highest income tax rate was 37 percent.
Showing Net Income
Net income is the difference between gross income and total income tax. The paycheck calculator takes into account your income and the prevailing income tax rates to calculate your net income. Therefore, you can know how much money you’ll receive in your pocket.