❓ Frequently Asked Questions
What is the difference between gross and net income?
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Gross income is your total salary before deductions. Net (take-home) is what you actually receive after taxes and deductions. For example, earning $100,000 gross might result in $75,000 net after federal (~$12,000), FICA (~$7,650), and state taxes. The difference depends on your tax bracket, state, and deductions.
What are FICA taxes and how much do I pay?
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FICA consists of Social Security (6.2% up to $168,600 in 2024) and Medicare (1.45% on all earnings, plus 0.9% extra on earnings over $200,000). Combined, FICA is 7.65% for most employees. These taxes fund Social Security and Medicare benefits you'll receive in retirement.
How do tax brackets work?
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The US uses progressive tax brackets where different portions of income are taxed at different rates. In 2024, single filers have brackets from 10% to 37%. The first $11,600 is taxed at 10%, the next portion at 12%, etc. You don't jump to the next bracket entirely—only income in that bracket pays that rate.
What is the standard deduction and how does it reduce taxes?
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The standard deduction is a fixed amount subtracted from gross income before calculating taxes. In 2024, it's $14,600 for single filers and $29,200 for married filing jointly. This reduces your taxable income. Earning $60,000 with a $14,600 deduction means only $45,400 is taxable.
How can I reduce my tax burden?
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Strategies: (1) Maximize 401(k) contributions ($23,500/year)—pre-tax reduces taxable income, (2) Use Traditional IRA ($7,000/year), (3) HSA contributions (~$4,150/year), (4) Tax-loss harvesting, (5) Claim all eligible deductions, (6) Adjust W-4 withholding. Consult a tax professional for personalized advice.