Work & Paying Taxes

Understanding Your Pay: Lesson 3

Deductions From Paychecks

  • Your employer can keep some of the money you earn, but only for certain purposes.
    • The total money you earned is called the “gross” pay amount.
    • The amount left after money is taken out (deducted) is called the “net” pay amount.
    • The net is your “take home” pay.
  • Examples of legitimate deductions are:
    • Income tax withholdings (federal taxes in Tennessee; most Tennessee workers do not pay state income taxes from paychecks)
    • Union dues
    • Deductions you have authorized (vanpool, health insurance, meals you eat at work)
    • Money you are paying back to your employer for things you lost, broke, or stole, or are repaying because you were overpaid
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