How can I model expenses that get deducted from my paycheck?
Many jobs offer benefits that get deducted directly from your paycheck, like health insurance premiums and more. Let’s walk through a real-life example of a bi-weekly paycheck with a $150 contribution to your healthcare premiums.
Paycheck Deduction Example
Let’s use an example with a health care premium. In most cases this is a pre-tax deduction. Your out-of-pocket contribution per paycheck is $150.
You can add this by clicking on a Plan you have created > scroll down to Expenses and click Add Expense > choose Health Care. There will be many details you can enter including the Starting Amount and Frequency. Next, you can click Healthcare Type > Standard. You will be prompted to choose Tax Handling from either Auto or Manual.
Auto: You will only need to choose if this expense is or isn’t a Payroll Deduction. If you choose Payroll Deduction, you will choose which income stream it is deducted from.
Manual: You will need to choose if the expense is Tax Deductible or not. If it’s tax deductible, choose which tax jurisdictions it applies to: Federal, State, and/or Local. Similar to Auto, you will choose if this expense is or isn’t a Payroll Deduction. If you choose Payroll Deduction, you will choose which income stream it is deducted from.
Note
401(k) or other employer retirement plan paycheck deductions will be part of the Flows section rather than Expenses.
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