Tag: Deductions

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Net Salary Calculator Nepal: Instantly Determine Your Net Earnings

Net Salary Calculator
Net Salary Calculator Nepal: Instantly Determine Your Net Earnings
Net Salary Calculator

Net Salary Calculator

Annual Income

Annual Deduction

Net salary refers to the amount of wages that you receive after various deductions from your gross income/gross salary. It is also known as bring in or take home salary. Net salary is also similar to adjusted gross income. In simple words, gross salary or gross pay is what an employee receives before the taxes and payroll deductions and the amount after performing those deductions in Net salary. In this article, we will talk about the deductions made in the gross salary before being credited to the employers and how the net salary is calculated. Net Salary Calculator is a tool that makes mathematical calculations easy.

Net Income vs Adjusted Gross Income

The difference between net income and adjusted net income is given below:
AspectAdjusted Gross Income (AGI)Net Salary
DefinitionRepresents total income minus specific deductionsThe amount an employee takes home after deductions
ApplicabilityUsed in the U.S. tax systempersonal finance and payroll
CalculationAGI = Total Income – Above-the-line DeductionsNet Salary = Gross Salary – Deductions
PurposeUsed to calculate taxable incomeIndicates the actual amount received in paychecks
Components of DeductionsIncludes above-the-line deductionsIncludes taxes, Social Security, Medicare, etc.
Timing of CalculationsCalculated before tax credits and itemized deductionsCalculated after all deductions are applied

How do you calculate net salary?

To calculate net salary, you need to subtract all the deductions from your gross salary i.e. money before any deductions. The amount left after that subtraction is your net salary.

Net Salary Calculator Formula:

Net Salary = Gross Salary – Deductions  Where:
  • Gross salary: First up we have to calculate the gross salary that has been fixed by the employer. Gross salary is the total amount without deductions. It includes the basic salary and any additional allowances or bonuses.
  • Deductions: Deductions are stuff like social security contributions, health insurance premiums, retirement contributions, income tax rates, and whatever other deductions apply. The specific deductions can change depending on the country, state, and company rules.

What are other deductions made from the salary?

Some of the common deductions that are made from your salary are:
  • Provident fund’s contributions to employees: EPF (Employment Provident Fund) refers to a scheme where both the employer and employee contribute equally. The employer and employee both need to contribute around 12% of the basic salary to this find. Net Salary Calculator can be used to calculate the monthly or annual deductions. This contribution helps build a retirement corpus giving you financial stability after your service years. In short, PF is a powerful saving plan that offers financial savings for the future even though it is deducted from the salary in the present.
  • Income tax: Every individual whose income exceeds a certain limit annually has to pay a certain amount to the government which is called tax. Income tax refers to the amounts that the government imposes on the financial income or salary of the employees. It is one of the major sources of revenue for the government all over the world. This tax is the backbone of the country as it helps to run the country smoothly with better financial conditions.
  • Tax from profession: Tax from profession, Professional tax refers to the amount that is deducted from your gross salary by the employer. Professional taxes somehow vary from state to state and from the amount of income. Income tax is well known, but very few know about professional tax beyond the term itself. The professional tax is said to be levied on only those employees who are said to have income above a specific limit, but professionals from every background must pay the professional tax.
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FAQs

What is take home salary?

Take home salary is another phrase for Net salary which we get after making certain deductions from our gross wage.

What is the monthly net salary?

Monthly Net Salary refers to the amount that an employee gets paid after his/her completion of a month in the job after the deductions are made.

What is the Net salary calculator formula?

The Net salary calculator formula is: Net salary = Gross salary-Deductions(Professional tax, provident fund, income tax)

Are net salary and in-hand salary both the same?

Yes, net salary and in-hand salary are the same as both effectively are the amount that is credited to you.

What is CTC?

CTC is the annual cost a business pays an employee including income and extra benefits.

What is an example of net income?

Net income is the amount that is received after the deductions. For employees, it refers to the money received after taxes, medical expenses, and retirement contributions.

When can I withdraw my entire PF amount?

You can only withdraw your PF amount on retiring or when you are no longer an employer of the company.

Conclusion

Net Salary Calculator is a very crucial and easy medium for calculating net earnings. The calculation process of Net salary is quite simple if you remember the simple formula given above. To calculate it accurately and find the right required amount you have to get the correct amount of deductions from the net salary. If the amount of given requirements is not accurate then it gives an inaccurate answer. Knowing how to calculate net salary is crucial for managing and negotiating your finances.
Categories
News Finance

Mastering AGI Calculator: A Step-by-Step Guide to Adjusted Gross Income

Mastering AGI Calculator
Mastering AGI Calculator: A Step-by-Step Guide to Adjusted Gross Income
AGI-Adjusted Gross Income Calculator

Agi Calculator



Wages, salary, tips:
Taxable interest:
Ordinary dividends:
Capital gains (losses):
Total IRA distributions - only the taxable amount:
Pensions, annuities - only the taxable amount:
Other:*

* Include as "other" any income you may have received from your business; alimony; unemployment compensation; rental real estate; royalties, partnerships, S corporations and trusts; farm income; and any taxable Social Security benefits. Also include taxable refunds, credits, or offsets in state and local income tax.

Gross income does not include gifts and inheritances, tax-free Social Security benefits and tax-free interest from state or local bonds.

Deduct the following items:

IRA contributions:
Student loan interest:
Moving expenses:
One-half of self-employment tax:
Self-employed health insurance contribution:
Contributions to SEP, SIMPLE and qualified plans for yourself:
Other:**

** Include as "other" any alimony paid, deductions for Archer Medical Savings Accounts, and penalties paid on early withdrawal of savings.


Total Gross Income:

Total Deductions:

AGI: $

AGI Calculator stands for Adjusted Gross Income Calculator. It is represented as the gross income subtracting adjustments to income. Generally, AGI starts with gross income, and then sudden adjustments are made in the gross salary. 

Features of AGI Calculator

  • Specific deductions: The calculation of AGI contains the deductions or certain expenses that are subtracted from the taxpayer’s gross income. These deductions reduce the amount of income that is subject to taxation.
  • Systematic: The AGI calculators are very methodical and organized. It carries out the calculations using dependable formulas and generative steps. The formula that AGI calculators use are agreed set of organized processes.
  • Reliable and convenient: It is easy to use and suitable for one’s purpose. With the help of a simple formula and some numerical quantities, you can find your required AGI.
  • Abstract concept: The AGI calculator provides the ability to understand the concept of AGI properly. The abstract concept doesn’t have any physical form but all the technical concepts and issues.
  • Determination of receivable amount: Within the calculations, you can find out the amounts of gross income and the expenses that need to be deducted from the gross income of an employee.

How to Calculate Adjusted Gross Income?

Adjusted Gross Income is calculated by using the given formula:

Adjusted Gross Income (AGI) = Gross income – Deductions

Where,

Gross Income: Gross income is the total amount of money you earn before any deductions or taxes are taken out.  It includes the following sources of revenue which are taxable in particular: Salary, wages, Interest, dividends, and earnings from royalties, partnerships, trusts, Social Security benefits, and Taxable state refunds.

Deductions: Deductions are reductions in the amount of money you need to pay or the income that gets taxed. There are two types of deductions:

  • Above-the-line deductions
  • Below-the-line deductions.

For example:

You’re supposed to get paid RS 60,000 monthly which is your gross income (GI) that is without deductions. But you’ve got above line deduction that is 500 for study materials expenses,2000 for health insurance, and 1000 for social security.

So mathematically,

AGI = 60000-(500+2000+1000)

       = 60000-3500

       = Rs.56500

Therefore, your total AGI ( Adjusted Gross Income) will be 56,500 after deductions.

What are above-the-line deductions in the Adjusted Gross Income?

The factors or deductions that you make from your gross income in the AGI calculator are also known as above-the-line deductions. The factors are as follows:

  • Education Expenses: Education expenses refers to the expense that you make to pay for your academic and educational fees. Education expenses are the numerous common deductions on above-the-line deductions as many people invest in education.
  • Security expenses: These expenses are made on job security as well as the social security of an individual as every social being needs security for them. Social security also concerns retirement income for almost every worker and government worker in Nepal especially.
  • Health and medication expenses: The health and medication expenses include the expenses made for hospital visits and doctor fees. It also includes payment for diagnosis, cure, mitigation, treatment, etc. Simply the medical bills and receipts for prescriptions are the above-line deduction.
  • Student loan expenses: Student loan expenses are those that cover expenditures for tuition fees, class fees, books, and other study materials. you can deduct specific amounts as student loans from the gross income.
  • Alimony paid: Alimony refers to the monetary support that a person gives their partner from whom they get separated and the order is offered by the court. So, this alimony amount is deducted from the gross income.
  • Transportation expenses: These expenses are the division of travel expenses that refer expressly to the cost of business transportation. The transportation can be local or national throughout the business dealings take place.

What are below-the-line deductions in the Adjusted Gross Income?

Below-the-line deductions are also known as itemized deductions. Here, you can itemize specific expense deductions of your choice. Some of the itemized deductions on the AGI calculator are Contributions made to charity, Casualty loss, and Out-of-pocket expenses.

Aside from the above-itemized deductions, there is a different section for less standard itemized deductions: Loss gain from gambling, Premium amortizable bond, and Work expenses incurred by disable.

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Frequently Asked Questions (FAQs):

How can I reduce my deductions?

The deductions that are included in your agi are all the above-line deductions. To reduce the deduction the expenses that you make should be controlled. Controlling expenses will help you reduce the deduction amounts.

How to calculate AGI?

To calculate AGI you need to subtract the deductions from your gross income.

What is the formula of AGI?

The formula of AGI is: Adjusted Gross Income(AGI)= Gross Income-sum of above-the-line deductions/Deductions

What does AGI stand for in finance?

AGI stands for Adjusted Gross Income.

Which is higher? Adjusted Gross Income or Net Income?

Generally adjusted gross income is higher because they are subject to taxes. Net income comes after the deductions but they are less subjected to taxes than AGI.

What is MAGI?

MAGI stands for Modified Adjusted Gross Income. It is the adjusted gross income plus a few items that need to be added back.

Conclusion

We can calculate AGI with the above given simple formula. The AGI calculator is more flexible than that of other calculators. We shouldn’t get involved in taxes and finances without having any important knowledge about them. Learning and gathering ideas on how to calculate the right portion of what you deserve is noteworthy. It is similar to a net salary calculator. There are many reasons AGI is important to make calculations. It is reliable and convenient.