Hourly Paycheck Calculator Step By Step With Examples

Hourly Paycheck Calculator

Hourly Paycheck Calculator is used to find the number of wages that will be received after deducting an adequate amount of taxes such as social security taxes, fed taxes, etc.

About Hourly Paycheck Calculator

The formula for calculating the Hourly Paycheck is as below –

Hourly Paycheck Calculator

Y + ( RH * P ) + ( OH * A ) – T

Y is the Year till date income
RH is the Regular hours worked by the worker
P is the wages paid per hour for regular hours
OH is the overtime hours worked by the worker
A is the wages paid per hour for overtime hours
T is the taxes which shall include social security taxes, medicare, fed taxes etc.

Wherein,

Y is the Year to date income.RH is the Regular hours worked by the worker.P is the wages paid per hour for regular hours.OH is the overtime hours worked by the worker.A is the wages paid per hour for overtime hours.T is the taxes which shall include social security taxes, medicare, fed taxes, etc.

At many places, as per work locations, the wages are paid on an hourly basis, and overtime hours, if any worked upon, will be paid on an hourly basis, but the hourly rate that shall be paid will be higher than the normal hourly rate. This calculator will determine the paycheck and in-hand receipt of the wages. Different deductions shall be made before encashment of the cheque, including social security tax, medicare, if any, Fed tax, state and local tax, etc. There could be further deductions such as insurance that is employee-paid health insurance etc. All these deductions must be accounted for and adjusted along with the total amount due, and the remaining net amount shall be paid to the worker. There are different pay periods in different parts of the world, but here we shall focus on weekly pay. For the time being, we shall ignore filing status, that is, whether the return will be filed single or married or household headHousehold HeadHead of Household (HOH) is a tax filing status that individuals can qualify for.read more, etc., as the deductions will vary. Our focus will drift toward tax instead of hourly paycheck calculation.

How to Calculate Using an Hourly Paycheck Calculator?

Below are the steps that need to be followed –

Step #1 – One needs to start with the income that has already been received, or in other words, one needs to account for a year till date income, as deductions also apply to them.

Step #2 – Determine the normal working hours of the organization or for the worker who is concerned for a week.

Step #3 – Figure out the hourly rate that shall be paid for those normal working hours

Step #4 – Now multiply the number of hours determined in step 2 by the rate paid per hour to determine the total amount due by the employer for the given week in concern.

Step #5 – Similarly, determine the overtime hours worked by the employee during the given week.

Step #6 – Now, determine the overtime rate per hour, which should be more than the normal hourly rate.

Step #7 – Again, take the product of the total overtime hours worked by the overtime rate per hour, and that amount shall be the overtime wages to be received by the employee.

Step #8 – In this step, take a total of the year till date income determined in step 1, total normal wages determine in step 4, and total overtime wages determine in step 7.

Step #9 – Figure out the taxes and other deductions such as social security tax, fed tax, local tax, medicare or employee-paid insurance, etc.

Step #10 – Deduct the total amount arrived in step 9 from the total wages arrived in step 8, and the net result will be the total paycheck to be received by the employee for that period.

Example

Mr. Y is a young youth living in the US and was born and brought up there only. He works in a company where the firm’s policy is to pay wages weekly. He has earned $5,780 till now. The company has the policy to pay $75 standard hourly and $100 per hour overtime wages. The normal working hours of the employee is 8 hours a day. Mr. Y, however, is eligible for 1-hour leave, but the same shall be unpaid. Mr. Y, due to personal reasons, had to take leave for 1 hour daily. To recover the unpaid wages, Mr. Y has worked overtime, and the total number of overtime he worked daily came to ½ hour.

The company shall deduct social security taxes of the total gross income at a rate of 10% and local and fed taxes at a rate of 5% of the gross income. The employee shall bear the insurance expensesInsurance ExpensesInsurance Expense, also called Insurance Premium, is the amount a Company pays to obtain an insurance contract for covering their risk from any unexpected catastrophe. You can calculate it as a fixed percentage of the sum insured & it is paid at a daily pre-specified period. read more, which are $350 for the year, and the same will be deducted all at once.

Considering all the above information and figures, you must compute the yearly income Mr. Y shall receive after considering necessary adjustments.

Solution

We are given the normal hourly rate and overtime wages rate per hour. However, we are not given the normal and overtime hours directly, so we would need to calculate that first.

We can now use the below formula to calculate the income from the hourly rate calculator.

We shall now determine T per the below –

= $5,780 + (49 x $75 ) + ( 3.50 x $100 ) – T= 9,805 – T

Taxes such as social security taxes will be 10% of the gross and fed taxes 5% of the gross and insurance we are given.

Therefore, net incomeNet IncomeNet Income formula is calculated by deducting direct and indirect expenses from the total revenue of a business.. It is the most important number for the Company, analysts, investors, and shareholders of the Company as it measures the profit earned by the Company over a period of time.read more will be 9,805 – 980.50 – 490.25 – $350, which shall be 7,984.25.