Buzz
If you're an hourly worker, calculating your wages by hand can help you ensure your paycheck is accurate. Usually, you just need to know your hourly rate and the total number of hours worked. Other elements like federal and state taxes may also affect the final amount. If tips are part of your earnings, a different method is required.
Instructions
How to Figure Out Regular Pay from Hourly Wages
Identify your hourly wage. When you started your job, your employer should have informed you of your pay rate. If you're unsure, reach out to your manager or HR department.
- Since July 24, 2009, the federal minimum wage in the U.S. has been $7.25 per hour.
- As of January 1, 2017:
- Thirty states or territories had hourly minimum wages higher than the federal rate.
- Twenty-one states or territories matched the federal rate.
- Check your state-specific wage info at https://www.dol.gov/whd/minwage/america.htm.
Log your working hours. Each employer will have a unique method for tracking time—some might use punch clocks, while others rely on digital time sheets. Regardless of the system, it's essential to understand how to properly log your hours. It’s also smart to keep a personal backup for comparison.
- If you earn different wages depending on when you work—say, weekdays vs. weekends—track each separately to ensure accuracy.
Monitor your overtime hours. If your job includes overtime pay after a certain number of hours, track those hours carefully. For instance, if overtime kicks in after 40 hours per week and you work 50, you’ll have 40 hours at your base rate and 10 at the overtime rate.
- In some workplaces, overtime begins after 8 hours in a single day. If your schedule was 10, 10, 8, 4, and 6 hours in a week, you’d calculate 34 regular hours and 4 hours of overtime.
Calculate total pay by multiplying your hours by your wage rate.
Include any bonuses earned. Some employees qualify for bonuses based on performance or company policy. If this applies to you, simply add your bonus to your total pay after completing your wage calculation.
- For instance, if your weekly wage comes to $290 and you earned a $30 bonus, your total pay would be $320.
Factor in deductions. Your final paycheck will usually be less than your gross wages due to required deductions. These may include federal, state, and local taxes, Social Security, and possibly unemployment insurance. You might also opt to have funds withheld for retirement.
- Withholding rates vary depending on your tax status and local regulations. For a full breakdown of your deductions, consult your employer’s payroll specialist.
- You can also try “wage calculators” online. These tools estimate your earnings based on your hours, rate, and dependents. Note: deductions shown are likely estimates.
Project your yearly earnings.Wage Calculation for Employees Who Receive Tips
Determine your hourly wage. If you’re a tipped worker—such as a server—much of your income will come from customer tips, which are unpredictable. Upon hiring, your employer may offer a competitive rate or default to your state’s minimum.
- As of January 1, 2017, the federal tipped wage is $2.13/hour, calculated by subtracting a $5.12 credit from the standard $7.25 minimum. This assumes you’ll earn at least $5.12/hour in tips.
- Eight states require no tip credit deduction. Twenty-eight others apply a tip credit but maintain higher-than-federal minimums. Eighteen states use the federal tipped rate of $2.13.
- Check your state’s regulations here: https://www.dol.gov/whd/state/tipped.htm.
Log your hours worked. Use your employer’s system to track hours. For added accuracy, keep a personal log to cross-check with your paycheck.
Track all tips received. Employers handle tips differently—some split them evenly among staff while others allow individuals to keep their own. Follow the policy in place and log your tips daily.
- Since tips are often paid in cash, it’s easy to overlook them. However, maintaining a record is key if you're serious about monitoring your income.
- Tips paid via credit cards might be logged electronically and added to your paycheck. Know your company’s method for handling these.
Work out your total weekly or yearly income.
Include your tips in the final total.
Figure out what you're truly earning per hour.
Tip reporting is essential. The IRS requires that all tipped employees log their daily earnings in tips and report the total to their employer by the 10th of the following month. Some employers may ask for more frequent updates. These figures are used to calculate tax, Social Security, and Medicare withholdings and are reported to the IRS.
- If your monthly tips are under $20, you're not required to report them.
-
Manually calculating your pay for a few pay periods can help you double-check your paycheck. Compare your estimate with what you were paid, and if there’s a mismatch, reach out to your employer or bookkeeper for clarification.
