Net Versus Gross Pay: What’s the Difference?
If you are looking for a new job, you are probably looking closely at job descriptions and salaries. When it comes time to interview for the job and negotiate a salary, it’s important to understand the difference between gross and net pay. Knowing the innerworkings of your pay will help you determine what job is best for you. Here are some important details to remember.
#1: Know the difference.
Gross wages refers to the amount of money you earn before taxes are taken out. Net pay is the amount of money you take home to live off of. When a potential household employer discusses salary options with you, they are most oftentimes talking about gross wages. Taxes that are taken out include social security, Medicare, and federal income tax. These amounts will be confirmed when you fill out your federal W-4 form once you’re hired.
#2: Make sure you’re being paid as an employee.
It’s very common for people to think that their household employee is not an actual employee. Paying people under the table is not legal. So, when you’re hired, make sure you are being paid on the books as an employee. If you aren’t paid this way, you are not protected with unemployment or worker’s compensation benefits. Your employer could also be subject to paying large fines to the government if it’s discovered that you’ve been being paid off the record.
Salary is a big factor when it comes to finding and securing a new job. So, before you head into your next interview, make sure you have a well-rounded view of how your payments work. This will help you narrow down your job search and find the right career path that aligns with your skillset and your salary guidelines.