What deductions from a paycheck are reasonable for a worker to expect ?
Social Security tax: 6.2% of pay up to $106,800 in 2009 Medicare tax: 1.45% (no upper limit) Federal income tax: 0% - 35% depending on income State income tax: 0% - 11% depending on state city income tax: 0% - ~3.5% depending on city State disability income tax: 0% - ~1% depending on state medical insurance: depends on employer 401K (retirement plan): 0% - 15% depending on your employer and your election Pre-tax transit: a dollar amount elected by you. (depending on your employer and your election) child care: a dollar amount elected by you. (depending on your employer and your election) gym membership: a dollar amount elected by you. (depending on your employer and your election) life insurance: a dollar amount elected by you. (depending on your employer and your election) disability insurance: a dollar amount elected by you. (depending on your employer and your election) There are more, but this is a good start. If you want to know the dollar amounts, you can use the free calculator at http://www.paycheckcity.com I hope this helps. Gary
Students at IITs/BITS are getting a package of 2 crores. Why do companies like Facebook, Google, etc. offer such a huge package to IITians/BITSians?
They’re not huge packages.In fact, it is very mediocre pay when you consider the places these companies are situated and the kind of taxes that they have to pay.Entry level software engineers to these companies are usually paid around $100,000 dollars an annum (which is 60 lacs). The ‘2 crore package’ news that you see is nothing but a hyperinflation, taking stock bonuses, joining bonus and relocation bonus all into one.With $100,000 in a place like San Francisco, you’ll struggle to make ends meet if you go in with a mindset of living the extravagant life. Out of the $100k, around $35–40k will go as taxes. That leaves you with around $60k.SF Bay Area has one of the highest rent rates in the world. Even to rent a hut, you’ll have to shell out at least $20k a year. A decent house with all basic amenities will cost you around $30k. And forget about getting a new house. The minimum salary that can sustain the mortgage payments for the cheapest of houses in SF is $170,000; which is 70% more than what you earn. It’ll take you at least 5 years to command that kind of salary.So, you’re left with $30k now. Labor is insanely costly in the United States. You’ll be paying people between $10 and $15 an hour for tasks such as plumbing, carpentering, mowing the lawn etc. There is no way you could afford a maid or a domestic worker with that kind of salary so expect to do all the cooking, cleaning and laundry yourself.Even if you live on a frugal diet and spend very little on third party labor, the maximum you’ll end up saving is $2–3k. And if you’re the kind of person who likes spending the weekends out partying, then you won’t be left with even that. No wonder the Americans have close to zero lifetime savings.So, if you think getting a job at one of these MNCs will make you rich beyond imagination, think again. It is only the beginning of your career. Don’t have unrealistic expectations about the kind of wealth you can accumulate at such a young age. Getting into these companies directly after college is, no doubt, a fantastic achievement but it’ll still take years before you can walk into any restaurant and order wine without gasping at the price tag.