The More You Make, The More They Take

You ever heard someone proclaim, "the more you make, the more they take"? Most likely they were talking about a paycheck and the amount of taxes taken out of it. Perhaps you worked overtime or received a bonus and was expecting a pretty nice check only to have your bubble popped when you realized that taxes have too taken its piece of your pie.

What can you do?

Gross Pay vs Net Pay

Gross pay is what you earn before anything is taken out (deductions, taxes, etc.).  Net pay is the amount you're paid after taxes and deductions. 

Gross Income could be $4000 while the net or take-home pay is $2800.

There are a number of factors that contribute to the amount taken out of a check. In this post, we're looking at how to fully take advantage of pretax deductions to hopefully lose less to taxes.

Why taking more out before taxes is a good thing...

We're all responsible for paying our share of taxes, but there are ways to lower your overall tax burden.

Simple Ways to Lower Your Taxable Income:

• Contributing to your company's retirement plan. 
• If there's a match, be sure that you're contributing up to the match, if not more. 
• Medical, Dental, Vision
• Don't skip out on these benefits.
• Health Savings Account
• Put away dollars to help pay health care expenses in a tax-free account. 
• Flexible Spending Accounts
• Also, a great way to cover out-of-pocket health care costs tax-free. 

While it may seem like a silly notion to have more money taken from your check, doing so on pre-taxed dollars can be beneficial in a number of ways. It encourages you to invest in your future (retirement) and stay on top of your health. Additionally, doing so will decrease your taxable income meaning you'll pay less in taxes. Often times, the difference you see in your check is minimum, but even if it's a bit more noticeable, you're still gaining more in the areas of retirement and health care. 

Do your homework, do the math, and manage your pre-tax dollars like a boss!