Spending time working out your deductions gives you a sense of where your money is going. While many of these deductions aren't really up to you, tracking these expenses can help you improve your personal finances.

Of course, things like federal and state taxes are a given for most of us, while contributions to a retirement account may not be.

Ultimately, being familiar with your deductions will help you catch and prevent any errors in your pay, or discrepancies in your allowances from going unnoticed.

Getting Started

The calculator allows you to compare, side-by-side, your current deductions with proposed changes.

You'll enter details like allowances, retirement deferrals, employer-sponsored coverage, and more. You'll also have to opportunity to calculate for different pay periods.

Go for annually if you want an overall sense of where your money is going for the year. Or try bi-weekly or monthly to see how certain deductions suit your budget.

There are a number of deductions that your employer is legally required to collect from your pay.

While you can place a limit the exact amount of money that is held back, you’re going to have to shell out some money for the following taxes:

Federal Income Tax

Federal income tax can eat up an awful lot of your salary. On average, the IRS takes about 25% of the average American's pay.

That said, employers do have a small hand in determining how much workers fork over to Uncle Sam.

Deductions are based on whether you're married or have kids, the number of allowances claimed on your W4 and your taxable gross wages.

Federal taxes are withheld by you and reported to the IRS each year. It's also worth pointing out that, while federal taxes are the largest chunk taken from your paycheck, you may end up getting some of that money back.

Writing off things like charitable donations, your mortgage, mileage or other business expenses can get you a bigger refund come tax day, but there's no doubt that federal income tax is the one deduction that hurts the most.

State Income Tax

State income taxes vary quite a bit depending on where you live.

Florida, for example, does not take state income tax, while California gets 13% of your hard-earned money.

Check the box on your pay stub to learn how much of your money is going to the state.

Medicare

All employees, the country over, are required to give 1.45 percent of their paycheck to Medicare. On top of that, employers must also contribute that same percentage.

All gross income is subject to the Medicare Tax. And high earners bringing in over $200,000 on an annual basis are subject to further taxation.

Social Security

Social security has been in place since the 1930s and functions as a means of supporting citizens after they retire from full-time work.

Both the employer and employee are on the hook for a 6.2 percent social security tax on their gross income.

That said, unlike Medicare, that taxable amount caps at $127,200. Any additional earnings will not be taxed.

Wage Garnishments

Wage garnishments are a mandatory deduction, but they won't apply to everyone.

For example, the IRS might take a cut of each paycheck if you owe back taxes, or if you're behind on childcare or alimony payments.

Under federal law, ordinary wage garnishments cannot be more than 25 percent of an employee's disposable wages.

Some states may have lower garnishment limits. In which case, the smaller amount is applied to the garnishment.

Disposable wages are determined by subtracting all required deductions from an employee's total wages.

As the name suggests, voluntary deductions are paycheck deductions that you, well, sign up for.

These deductions may include things like:

• health insurance
• flexible spending accounts
• disability insurance
• retirement contributions

Additionally, voluntary deductions may also cover union dues, a parking space, paycheck advances and other opt-in benefits.

Employers are not required by law to offer these kinds of benefits, nor are employees required to enroll in them. That said, the federal and state government sometimes have policies in place that affect these deductions.

For example, if you're an employer offering health insurance, you will need the employee's written authorization to deduct the funds needed to participate in the program.

Also, for paycheck advances, the state may have policies on whether they should be withheld from final wages.

With voluntary pre-tax deductions like 401ks, contributors postpone paying taxes.

This means that the amount you put into the account is not subject to taxes, nor are the earnings generated for the time those funds stay in the account.

To determine ones taxable income, you must deduct all pretax contributions--healthcare, an IRA, etc., from your gross income.

Whatever is left, represents the taxable pool of income. If an employee has no pretax deductions, all gross wages are taxable.