Tax Calculation Methodology
PaystubKit is a paystub generator and self-employed income documentation tool for freelancers, 1099 workers, and owner-employees in the United States.
Short answer: PaystubKit estimates supported pay-period tax and deduction lines from accurate user-entered records. It is designed for self-generated paystubs and earnings statements, not for payroll execution, tax filing, income verification, or guaranteed third-party acceptance.
Calculation scope
PaystubKit separates calculation logic by document mode. The goal is to provide readable, consistent pay-period summaries while making estimate boundaries clear.
Owner-employee mode
For S-Corp or C-Corp owner-employees who pay themselves wages through a business. This mode focuses on wage-style paystub records, federal withholding estimates, FICA lines, supported state income tax lines, manual deductions, and YTD totals.
Freelancer / 1099 mode
For freelancers, contractors, sole proprietors, creators, online sellers, and other self-employed workers summarizing net self-employment income. This mode uses net self-employment income as the main input and estimates self-employment tax semantics.
What PaystubKit estimates
What PaystubKit does not estimate
These exclusions are intentional for the MVP. Users can add some items manually when they apply to their own records, but PaystubKit does not claim full payroll-provider coverage.
Primary public sources
PaystubKit is built around public tax authority concepts and structured tax data. Source references are used to keep calculation assumptions reviewable.
IRS Publication 15-T
Federal income tax withholding methods and employer withholding context.
IRS Self-Employment Tax
Self-employment tax context for freelancers, contractors, and sole proprietors.
Social Security wage base
Social Security contribution and benefit base context for wage limits.
State revenue departments
State income tax rules, withholding guidance, and state-specific updates.
Calculation confidence levels
Use methodology with source records
A PaystubKit document should be supported by the records behind it: invoices, bank deposits, bookkeeping exports, payroll wage records, or other source documents that match the pay period and income numbers entered by the user.
Frequently asked questions
Does PaystubKit calculate exact final tax liability?
No. PaystubKit estimates supported pay-period tax and deduction lines for self-generated records. Final tax liability can differ from pay-period estimates, payroll provider calculations, or tax filing results.
What is the difference between owner-employee mode and freelancer mode?
Owner-employee mode is for S-Corp or C-Corp wage-style records. Freelancer mode is for net self-employment income summaries, such as 1099 contractor income after business expenses for the period.
Does PaystubKit include local taxes?
Most MVP calculations focus on federal, FICA or self-employment tax, supported state income tax lines, and user-entered manual deductions. Local taxes and special payroll programs may need manual handling.
Does PaystubKit verify income or tax compliance?
No. PaystubKit does not verify income, run payroll, remit taxes, file tax forms, or certify tax compliance. Users are responsible for accurate inputs and supporting records.
Related guides
Self-Employed Income Documentation Guide
Understand source records, earnings statements, and income documentation boundaries.
1099 vs W-2 vs W-9
Compare annual tax forms with pay-period paystubs and earnings statements.
Is It Legal to Make Your Own Pay Stubs?
Learn lawful-use boundaries for self-generated income documents.