Why is there such a difference between the gross and net amounts on my paycheck?
What is the purpose of paying taxes?
You get a job paying $5.50/hr and quickly determine your weekly pay. When you get your first paycheck, you wonder what the deductions are and where the money goes.
Your gross pay is the amount earned by multiplying the wage rate by the number of hours worked. Net earnings result when various deductions are subtracted from income.
Some of your earnings go to taxes. Every citizen in the United States who earns an income must pay taxes to the government.
To better understand paycheck deductions, review the following sample paycheck and pay stub.
Move your mouse pointer over any word to find out more.
NOTE: This paycheck and pay stub (earnings statement) are for sample purposes only.
For more information about Paycheck Deductions, visit the Tax Forms or Tax Funded Programs sections of this activity.