) suppose employee has an gross salary of $5000 and $ 500 as pre tax contribution and post tax contribution as $200 then what is the taxable wage amount and net pay?

[Former Member]

Q) suppose employee has an gross salary of $5000 and $ 500 as pre tax contribution and post tax contribution as $200 then what is the taxable wage amount and net pay?

[Former Member · Accepted solution]

Taxable amount would be $4500, and net would be 4300

Pretax dedn - Deducted before tax calculation, 5000-500= 4500

Post tax - deducted after tax calculation 4500 taxable amount

Net - 4500 - 200 =4300

This is not exact calculation because the tax deductions come into effect for calculating the net, I have briefed just for Idea.

BR

Upen

[former_member235056]

Hi Rakesh,

Generally pretax contribution is marked to Processing class 68 as non taxable earning along with processing class that specifies wage type as pre-tax deduction, it will be considered to reduce taxable income first i.e. gross pay is reduced by this amount before tax calculation process itself.

In your case say for tax type 01 we are looking to calculate tax then /301 will be $5000 and /601 would be $5000-$500 = $4500 which will be also same as /701 returned from BSI as actual taxable income on which tax would be calculated and output in the form of /401 tax.

This tax say if tax was $100 would be mandatory deduction which after reduction from gross will then reduce post tax contribution f $200 i.e. $5000 - $100 - $200 = $4700 would be your net pay /559 if there were say no other employee taxes or other deductions.

Thanks,

Ameet