Short Answer 
The difference between gross earnings and take-home pay is crucial; for example, Josh earned $1,900 but received only $1,100 due to deductions. Withholding taxes, determined by the W-4 form, and additional deductions such as social security and health insurance significantly reduce his net earnings.
Step 1: Understand Earnings vs. Take-Home Pay
When Josh earned $1,900 for two weeks of work, the total amount he receives on his paycheck is known as take-home pay. Take-home pay is the net amount after all deductions have been applied. It’s crucial to understand that the gross earnings (the full amount before deductions) is different from the net earnings, which is what he ultimately receives.
Step 2: Recognize the Role of Withholding Taxes
Employers are required to deduct withholding taxes before issuing paychecks. This is based on the information provided in the W-4 form that employees fill out when they start a job. Depending on how Josh filled out this form, his employer might have withheld a significant amount for taxes, which can greatly decrease the actual paycheck amount he receives.
Step 3: Identify Additional Deductions
In addition to taxes, there may be other deductions from Josh’s paycheck for benefits and contributions such as social security, Medicare, health insurance, or retirement plans. These deductions can cumulatively reduce the take-home pay further. Understanding all of these elements is essential to grasp why Josh ultimately received only $1,100 from his gross earnings.