HR Glossary for HR Professionals
Glossary of the most common HR terms and acronyms to assist professionals navigating the ever-growing and ever-changing world of HR terminology.
What Are After-Tax Deductions?
After-tax deductions—sometimes referred to as post-tax deductions—are payments that are automatically deducted from an employees’ income after taxes have been withheld.
What is the Difference Between Pre-Tax Deductions and After-Tax Deductions?
Pre-tax deductions are withheld from an employee’s wages before they’re taxed while after-tax deductions are withheld from an employee’s wages after they’ve been taxed.
Because these deductions are removed from gross pay, pre-tax deductions reduce an employees’ taxable income. These types of deductions can include:
Types of Payroll Deductions
After-tax deductions can be withheld from wages for a few different reasons. These include:
- State and federal income taxes
- Social Security payments
- Retirement deductions
- Medicare taxes
- Other benefits deductions
Some examples of after-tax deductions include Roth IRA contributions, 401(k)s, disability insurance, or garnishments.
Where to Find Deductions on Form W-2
Form W-2 is an official wage and tax statement issued by the IRS. Each year, employees receive their Form W-2 during tax season, which indicates how much money they earned in the previous year for a specific employer and how much money was withheld from these wages. Workers use this information to file their annual taxes.
The following deductions can be found on Form W-2:
- Taxable income – Box 1
- Federal income tax withheld – Box 2
- Income subject to Social Security taxes – Box 3
- Social Security tax withheld – Box 4
- Income subject to Medicare taxes – Box 5
- Medicare tax withheld – Box 6
- Other compensation and deductions from taxable income – Box 12
- State income tax – Box 17
- Local income tax – Box 19
Related Terms: Pre-Tax Deduction