Your first paycheck ever is always the most exciting, and sometimes the most disappointing. Why is it disappointing? Because more often than not, you get a lot less money than what you were expecting. So what are some things you need to know about paychecks so you can save yourself some disappointment and not spend your money before you get it? The following is a simple list of paycheck basics:

1. Gross vs. Net
2. Filling out your W-4
3. Taxes
4. Benefits
5. Retirement
6. Direct Deposit vs. Paper checks

Gross vs. Net

Your gross earnings are what you have earned total before anything is taken out. It's simple to determine, and usually a nice round number. If you are paid hourly, at ten dollars an hour and work forty hours in a week, your gross earnings for the week would be $400, but that's not how much you will see on your paycheck. You will be paid your net earnings. Net earnings are the monies you receive after taxes, benefits, and retirement are taken out of your paycheck. There are ways to minimize what is deducted and maximize what you are paid, but be careful. If you don't have enough taken out to begin with, especially for taxes, or you'll owe the government when its time to file your tax return.

Filing out your W-4

Whenever you start a new job you need to fill out a W-4 for your employer to help determine how much they need to deduct in taxes from your paycheck. You should also fill out a new W-4 if you've had a life changing event, like marriage, birth of a child, death, etc. You should always check your W-4 at the beginning of the year to make sure it reflects an accurate amount of deductions.

So, time to go through actually filling out the W-4 so your paycheck reflects an accurate amount of taxes deducted. First you provide your personal information: name, social security number, and address. Then check the box for your marriage status, you're either married or single. You then have to decide how many withholding allowances to claim on lines 5 and 6. This number can be similar or the same as the number of exemptions you claim on your personal tax return. The more allowances you decide to claim, the less income tax is withheld on your paycheck. If you claim more than nine allowances, your employer may have to send your W-4 to the IRS for review. This is not a case for worry as many people who make over $100,000 a year can claim nine or more allowances if they take substantial itemized deductions. You can claim one allowance for yourself, one for your spouse and one for each of your dependants if you want. You can claim as many allowances as you would like regardless of whether you are married and have dependants or not, but remember, the more allowances you claim, the less income tax will be taken out of your paycheck and the smaller your tax refund. This can be a tricky thing because if you claim too many allowances, you might owe taxes when it's time to do your tax return.

If you have more than one job, your spouse works, or if you itemize deductions on your tax return, you will want to use the worksheet on Form W-4 page 2. You'll use the worksheet to calculate the number of allowances to take rather than relying on it being the same number as you have for exemptions, or claiming more allowances than you should. Also, if you have more than one job, be sure to claim all of your withholding allowances at one, and claim zero allowances at the other. By claiming zero the highest amount of income taxes for your income bracket will be withheld.

You are exempt from any income taxes at all if your total income for the year is less than $800. If this is the case, skip lines 5 and 6 and write "exempt" on line 7.

You then print (if you are doing it on a computer), and sign and date the form. Lines 8, 9, and 10 will be left blank to be filled in by your employer.

Taxes

Once you've filled out your W-4 form correctly and given it to your employer, it will help your employer determine the amount of taxes to be withheld on each paycheck. The mandatory taxes to be withheld are Federal Income Tax (unless you fit the criteria of being exempt), Social Security, Medicare, and State and/or Local Income tax (unless you live in a state that does not deduct state income tax). Generally, Federal Income Tax can be anywhere from 10% up to 35% of your income, Social Security and Medicare combined are 7.65% of your income before withholding allowances, and State/Local Income Tax varies from state to state.

Taxes on some level will always be taken from every paycheck, so don't expect to get your entire gross earnings, ever.

Benefits

Your employer may offer a benefits plan. If you choose to participate in the benefits plan, your contributions to it will be taken out of your paycheck before you are paid. Benefits plans can include: medical insurance, dental insurance, vision coverage, life insurance, short and long term disability coverage, a flexible spending account, and a lot of voluntary benefits, for example a cancer coverage plan.

Employers may also offer what is called a Cafeteria plan. This is a flexible benefits plan authorized by the IRS code section 125. You are able to choose from among two or more benefits offered by the employer and employee deductions to fund the benefits plan are tax exempt from Federal, Social Security, Medicare, and in some states, State/Local income tax. This is a great way to do benefits as it lowers your amount of taxable income, thus lowering the amount of taxes withheld.

The types of benefits offered under a Cafeteria plan can include accident and health insurance, dependant care assistance, group term life insurance (life insurance for an individual in excess of $50,000 is includable in taxable income), additional vacation days, and more.

Offered by some employers is a flexible spending arrangement (called FSA by the IRS) commonly known as a flexible spending account. An FSA allows an employee to set aside part of their earnings in an account to pay for qualified expenses, most medical expenses qualify. Money deducted from your paycheck to be put into an FSA is not subject to payroll taxes, so you get a substantial tax savings. FSA accounts can be accessed by a debit card to pay for things like co-pays, office visits, laser eye surgery, and other qualified expenses.

Retirement

Someday you want to quit working, or only work because you want to, not because you have to. That time of you life is called retirement. The only way you can retire and live comfortably is to start planning now. Many employers offer some sort of retirement plan, or if they don't, you can set one up for yourself. Retirement is one more thing that can be deducted from your paycheck before or after taxes.

Employer offered retirement plans which require contributions from the employee are commonly known as 401K plans. There are two different types of these plans which you can choose from. The first, and most commonly offered retirement plan is a traditional 401K plan where money is deducted from you paycheck before taxes and put into a 401K account where it is invested into qualified investments. This type of plan offers tax savings upfront, but regardless of how much you put in, you have to pay taxes on everything that you take out of it, both your contributions and any money that has accumulated through your investments. The second type, and less commonly offered, is a Roth 401K plan. A Roth 401K takes your contributions after they have been taxed, and puts them into qualified investments. This does not offer tax savings up front, but all money withdrawn from a Roth 401K is tax free, including any money accumulated through investments. Employers will often offer to match funds put into retirement plans, giving you one more incentive to put away money now for the future.

If your employer does not offer a retirement plan, don't fret, you can still get one. An IRA, or Individual Retirement Account, is a retirement plan account that provides some tax advantages for retirement savings. An IRA is much like a traditional 401K, where contributions are taken before taxes, but you choose a provider and set up the transfer of funds with them, rather than your employer doing the leg work. A Roth IRA is also available, and is much like the Roth 401K, where your contributions have already been taxed and money taken out of the account at retirement is tax-free.

Direct Deposit vs. Paper Checks

The last paycheck basic is whether you choose direct deposit or not. Most employers offer direct deposit where your paycheck can be deposited directly into your bank account. This gives you access to the funds sooner, rather than waiting for a check, taking it to the bank and waiting for it to clear. To set up direct deposit, if your employer offers it, you just have to give your employer a voided check and your routing number and they'll do the rest. If they don't offer direct deposit, then you're out of luck and have to do it the old-fashioned way of waiting for your check.