Payroll deductions

Many deductions come from one's gross salary or wages to determine the amount on the paycheck. This article summarizes the most common of these deductions, and shows which deductions lead to intermediate results such as Social Security and Medicare (FICA) wages and Form W-2 Box 1.

Instances of "401(k)" should be read to include 403(b) and 457(b) plans, and the federal Thrift Savings Plan (TSP).

See Fringe Benefit Exclusion Rules for other deductions that reduce FICA wages, including Subtracting all the above from gross pay gives your FICA salary/wages
 * 1) Start with Gross Pay: The total amount of remuneration before removing taxes and other deductions.

From there, subtract traditional Elective Deferrals and any mandatory pre-tax pension contributions Those subtractions from FICA pay give your W-2 box 1 amount W-2 box 1 is what goes on the Form 1040 line for "Wages, salaries, tips, etc."

You may have elected to make various contributions that don't reduce the W-2 box 1 amount, but do reduce your paycheck amount. These include Subtracting those amounts gives your Net before tax and withholding

The final group of subtractions are the FICA taxes, and withholding amounts based on the Form W-4 you have given to your employer. Subtracting those amounts gives your Amount on the paycheck that you cash (or receive via direct deposit).