How TakeHome IQ Calculates Your Paycheck

This page describes the calculation paths currently configured in TakeHome IQ. It is an implementation inventory, not proof that every legal method, form default, jurisdiction, effective date, rounding rule, or official example is certified. Federal reference links are not yet approved archived entries in the 2026 certification corpus.

The Cash Flow

A configured calculation generally walks this path:

1. Start with gross pay for the period.
2. Apply each entered deduction’s configured treatment to the relevant taxable-wage bases.
3. Compute federal income tax withholding on what’s left.
4. Compute FICA (Social Security + Medicare) on a separate taxable base, since some pre-tax deductions reduce federal tax but not FICA.
5. Compute configured state, local, and employee payroll-program estimates where supported.
6. Subtract after-tax deductions (Roth 401(k), garnishments, post-tax items).
7. What remains is net pay.

The order matters, but a label alone does not prove a deduction’s legal treatment. Confirm the plan, funding arrangement, compensation definition, jurisdiction, and payroll setup, then choose the matching configured treatment in the app.

Federal Income Tax Withholding

The configured standard federal path annualizes current-period taxable wages, applies the entered W-4 adjustments, performs a filing-status bracket lookup, de-annualizes the result, then applies the entered credit and additional withholding. The main input supports the Step 2, Step 3, Step 4(a), Step 4(b), and Step 4(c) values used by that path.

1. Annualize the configured current-period federal taxable wages.
2. Apply the entered other-income and deduction adjustments.
3. Apply the configured filing-status and Step 2 branch.
4. Look up configured annual withholding and de-annualize it.
5. Apply the entered dependent credit and additional withholding.

The audit trail shows the numeric steps the app used. It does not independently establish that the current data, employer method, missing-form default, rounding, or household facts match the controlling authority for a real paycheck.

FICA: Social Security and Medicare

The configured payroll-program path keeps Social Security taxable wages, Medicare taxable wages, and their optional YTD inputs separate. These values can differ from federal taxable wages and from gross pay depending on the facts and treatment selected.

• Social Security: the configured calculation uses its own taxable wages and optional YTD value.
• Medicare: the configured calculation uses a separate taxable-wage base and optional YTD value.
• Additional Medicare: the current-period estimate uses the configured threshold path; it is not final return liability.

If either YTD input is absent, the configured fallback may not match the employer’s program-specific history. Review the printed taxable-wage/YTD rows and current primary authority before relying on a threshold-crossing estimate.

Supplemental Wages: Bonuses, Commissions, Severance

The app exposes configured flat, aggregate, and top-rate supplemental paths. The correct path depends on payment identification, eligibility, reference wages, prior withholding, calendar-year totals, employer grouping, and current authority that the app cannot infer from a generic “bonus” label.

• Flat path: requires explicit eligibility and payment facts.
• Aggregate path: requires the regular-wage reference and prior withholding facts.
• Top-rate path: requires the applicable calendar-year total and employer-grouping facts.

The configured result is not proof that an employer selected the legally applicable method.

Deductions: How Tax Treatment Drives the Math

Every entered deduction has a configured treatment that determines which modeled wage bases it reduces. The correct choice depends on plan documents, funding, compensation definitions, employer setup, jurisdiction conformity, caps, and YTD facts.

• Configured exempt-all: reduces the modeled federal, state, and payroll-program bases.
• Configured partial exemptions: reduce only the selected modeled bases.
• Configured taxable-all: subtracts the entered amount without reducing a modeled taxable-wage base.

Percentage deductions use the app’s modeled gross-cash input before applicable configured caps. That implementation behavior does not establish the plan’s legal compensation base.

State and Local Withholding

Each U.S. state with an income tax publishes its own withholding guidance. TakeHome IQ provides 2026 state estimates using the jurisdiction data and inputs currently available. Available configured paths include:

• Configured regular methods and selected certificate inputs
• Selected employee payroll-program and locality estimates
• Configured reciprocity pairs

Availability does not certify legal completeness, authoritative jurisdiction assignment, or reachability for every user. A state individual-income-tax estimate may be zero while separate payroll-program or local lines may still apply. These are planning estimates, not a certification that every jurisdiction branch matches every employer payroll system.

What TakeHome IQ Doesn’t Model

TakeHome IQ is a paycheck calculator, not a tax filing tool. There are real things we deliberately don’t calculate:

• Year-end refunds or amounts owed. Withholding is an estimate of your annual tax; your actual tax is calculated on your return when you account for all income, deductions, and credits across the full year.
• Investment income, business income, capital gains. These don’t flow through W-2 paychecks.
• Quarterly estimated taxes for self-employment or 1099 income.
• State tax credits (e.g., earned income credits) that apply at filing time, not at withholding time.

If a number in your paycheck doesn’t match what TakeHome IQ shows, the possible causes include: a deduction’s tax treatment is set differently than the app assumes, YTD inputs are stale, the employer uses a different permitted method, or a certificate, local, payroll-program, resident/work-state, or rounding branch is not fully represented. The audit trail can help identify the first point where the estimates diverge.

Sources

The Sources & Citations page lists official agency reference links and explains why a live link is not certification evidence. The 2026 jurisdiction corpus separately requires archived primary sources, dates, locators, hashes, implementation mapping, reachable inputs, persistence, and exact official examples. No federal/IRS/SSA family is currently approved in that corpus.