Erin’s weekly gross pay is $610. Two deductions of $52 and $142.13 are withheld from her gross pay. Complete the following sentence. Her weekly net pay is
The Correct Answer and Explanation is:
Her weekly net pay is $415.87.
Explanation
Net pay, also known as take-home pay, is the amount of money an employee receives after all deductions have been subtracted from their gross pay. Gross pay is the total amount earned before taxes and deductions.
In Erin’s case, her gross pay is $610. She has two deductions from her pay:
- First deduction: $52.00
- Second deduction: $142.13
To find the total deductions, we add the two amounts: 52.00+142.13=194.1352.00 + 142.13 = 194.13
Now, to calculate Erin’s net pay, we subtract the total deductions from her gross pay: 610.00−194.13=415.87610.00 – 194.13 = 415.87
So, Erin’s weekly net pay is $415.87.
Why Net Pay Matters:
Understanding the difference between gross pay and net pay is essential for financial planning. Employees often focus on the gross salary mentioned in job offers, but the net pay is what actually hits their bank account. Deductions from gross pay can include:
- Federal and state taxes
- Social Security and Medicare taxes
- Health insurance premiums
- Retirement contributions (e.g., 401(k))
- Other voluntary deductions (e.g., union dues, charitable donations)
These deductions can significantly reduce the amount of money one receives, so it’s important for individuals like Erin to budget based on net income, not gross.
Employers must legally withhold specific deductions, and these are reported on an employee’s pay stub for transparency. Erin, by reviewing her pay stub, can verify that the correct amounts are being deducted.
Knowing how to calculate net pay empowers employees to check their pay accuracy, plan expenses, and set savings goals wisely.
