KEEPING YOUR JOB
Chapter 5 Notes
Money
Management
Understanding and Preparing
Work Forms
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When you begin your first paying job, you will
need to be aware of a number of forms.
Most of these forms ask for information that
employers are required by law to keep.
Some are completed before you can start work
(Social Security Card and work permit, if you are
under 16), while others are completed when you
begin working (W-4) and by the employer after
you have worked during the year (W-2).
You should be familiar with these forms!
FORM W-4
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When you report to work you will be asked to fill out
a FORM W-4, Employee’s Withholding
Allowance Certificate.
The information you put on this form will determine
the amount of money your employer will deduct from
your check for income taxes.
On this form you declare your total number of
allowances – persons claimed that reduce the
amount of tax withheld from your paycheck.
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The more allowances you claim, the less tax you will have
withheld.
You may automatically claim yourself; other allowances can
be made for spouse and children.
HOW MANY ALLOWANCES
DO I CLAIM
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Most students either claim EXEMPT or 0 under allowances.
Some choose to claim 1 if they are paying their own way.
Exempt Status – means that you DO NOT have to have ANY
federal income tax withheld from your check.
Who can claim exempt?
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You cannot claim exemption from federal withholding taxes for
2007:
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If you are exempt from federal withholding taxes, you must certify
on the W-4 form that you meet both of the following conditions:
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If your income exceeds $900 and includes more than $300 of unearned
income (interest and dividends), and another person can claim you
as a dependent on their return.
Last year you had a right to a refund of ALL federal income withholding
because you had no liability, and this year you expect a refund of ALL
federal income withheld because you expect to have no tax liability
Exemptions expire each year so new W-4’s have to be filed.
Social Security
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Because all workers in the U.S. must pay a social security tax from wages
earned, all have a social security number. Your social security number is
your permanent work identification number.
While you are working, your employers withhold social security taxes from
your pay and contribute matching amounts. When you become eligible,
benefits are paid to you.
Children born in the U.S. must have number before they are one if their
parents would like to claim them as a dependent on their tax return.
If your card is lost or damaged, you can order a replacement card.
The Social Security Administration sends statements out each year updating
you on your total contributions into the system.
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Your Social Security Statement is a concise, easy-to-read personal record of the
earnings on which you have paid Social Security taxes during your working years
and a summary of the estimated benefits you and your family may receive as a
result of those earnings.
Click on this link for a calculator that will help you estimate your retirement benefit!
http://www.ssa.gov/OACT/quickcalc/
How does Social Security Work?
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Social Security Defined –
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A social insurance program that covers most of the Nation's work force. It is
often the basic retirement plan to which other benefits are added. It provides
retirement, disability, survivor, and Medicare benefits.
The money you pay into the system gets immediately paid back out to the
people who are currently getting Social Security checks
In 1935, when Social Security started, there were many more people paying
into the system than those receiving benefits. The ratio of workers to
retirees meant that workers did not have to pay much into the system in
1935 to support the retirees
In the future, the retirement of millions of baby boomers will hurt the ratio -there will be so many retired people that the working people will not be able
to support them.
Social Security is a BIG part of a lot of people’s retirement plans so how
much trouble is the program really in? Will it be there for you when you
retire? That is up for a ton of debate. Pay attention and you’ll see news
stories on it each and every week!
Social Security in the news!
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For example, let’s check out the type of news clips you can expect to see in the
news…
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http://www.msnbc.msn.com/id/6840592/
http://www.msnbc.msn.com/id/7725312/
Example of Political Debate about Social Security: http://youtu.be/g-HlSXQoyl8
ASSIGNMENT:
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Go online and find a current article from a reputable news source (For example:
Newsweek, CNN, MSNBC) that does at least one of the following:
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Explains the basics about social security
Talks about Social Security reform
Discusses whether or not Social Security is really in trouble
Discusses the current political debate about social security
Print the article, read it underlining or highlighting the key points.
Open up Microsoft Word. Also, open up the “Social Security Article Review” Assignment
in the Chapter 5 folder. Write a two to three paragraph response summarizing the
article and giving me your opinions on the topic discussed.
FORM W-2
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Form W-2 lists income you earned during the year and all the amounts
withheld by the employer on your behalf. These amounts include
federal, state, and local income taxes, & the social security tax.
An example W-2 Form can be seen at the following links:
http://www.irs.gov/pub/irs-pdf/fw2.pdf
http://www.classroomtools.com/tax_w2.htm
Your employer MUST provide you with a copy of your W-2 no later than
January 31st of the year following the one in which you were
employed – even if you only worked part of the year! If they don’t send
you one... Contact them!
Once employees receive their W-2’s, they can compare how much they
paid in federal income tax to how much they were supposed to pay in
federal income tax. It is then easy to determine if the employee owes
more or if they have a refund due to them!
Employees have until April 15th each year to file their tax returns to
either pay up or request their refund!
Tax Fraud
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Before you file your return, you have to make sure you
declare ALL OF YOUR INCOME! One of the most
common forms of tax fraud is the underreporting of tips!
Tax Fraud – Fraud is a deception deliberately practiced in
order to secure unfair or unlawful gain. As it relates to
taxes, it's simply "cheating" by intentionally paying less tax
than is legally due. Here are some examples:
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Deliberately underreporting or omitting income,
Overstating the amount of deductions
Keeping two sets of books
Making false entries in books and records
Claiming personal expenses as business expenses
Claiming false deductions
Employee Responsibilities to
Employers
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Competent Work
Thrift
Punctuality
Pleasant Attitude
Loyalty and Respect
Dependability
Initiative
Interest
Self-Evaluation
Responsibilities to Other
Employees and Customers
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Other Employees
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Teamwork
Thoughtfulness
Loyalty
To Customers
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Helpfulness
Courtesy
Employer’s Responsibilities
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Adequate Supervision
Fair Personnel Policies
Safe Working Conditions
Open Channels of Communication
Recognition of achievement
Compliance with employment laws
EMPLOYMENT LAWS
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In the last fifty years, many laws have been passed to provide
protections to American workers.
Department of Labor is in charge of the biggies:
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Minimum Wage, regular working hours, equal opportunities, no
discrimination, safe working conditions etc....
Some laws you should be aware of:
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Social Security Act (Federal Insurance Contributions Act of 1935)
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Enacted as a social insurance program to provide aide to the elderly
and disabled.
Medicare was added to this act in 1965. It provided hospital and
medical insurance protections for elderly retired persons and other
qualified persons.
EMPLOYMENT LAWS
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Unemployment Compensation – important part of the Social Security Act provides
that every state must have an unemployment insurance program that provides benefits
to workers who lose their job through no fault of their own.
 After a waiting period, laid-off workers may collect a portion of their regular pay for
a certain length of time.
Fair Labor Standards Act – popularly known as the Wage and Hour act... Set the
minimum wage (initially at 25 cents/hour ).
 A minimum wage is the legally established lower limit on wage employers must
pay. The federal minimum wage currently at $7.25.
 Another provision of the act states that hourly workers cannot be employed for more
than 40 hours in a week without paying them overtime. Employers must pay the
employees 1 ½ times their regular rate for any such hours.
 Minimum wage law has some exceptions... Jobs with tips is an example.
 US Department of Labor Overtime Laws: http://www.dol.gov/dol/topic/wages/overtimepay.htm
Worker’s Compensation – the name for laws that give financial security to workers
and their families for injury, illness, loss of income, or death that occurs as a result of the
job or working conditions.
 “Liability without fault” – employers are liable even if it wasn’t their fault.