Understanding your Pay Check
= = = "Understanding Your Paycheck" = = =
WOODEN NICKEL
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Gross pay: $1,222.02
Deductions: ----------- Income Tax: 244.40 Outgo Tax: 45.21
State Tax: 61.10 Interstate Tax: 5.89 County Tax: 6.11 City Tax:
12.22 Rural Tax: 4.44 Back Tax: 1.11 Front Tax: 1.16 Side Tax:
1.61 Up Tax: 2.22 Down Tax: 1.11 Tic-Tacs: 1.98 Thumbtacks:
3.93 Carpet Tacks: 0.98 Stadium Tax: 0.69 Flat Tax: 8.32 Surtax:
3.46 Ma'am Tax: 2.60 Parking Fee: 5.00 No Parking Fee: 10.00
F.I.C.A.: 81.88 T.G.I.F.: 9.95 Life Insurance: 5.85 Health
Insurance: 16.23 Disability: 2.50 Ability: .25 Liability Insurance:
3.41 Dental Insurance: 4.50 Mental Insurance: 4.33
Reassurance: 0.11 Coffee: 6.85 Coffee Cups: 66.51 Calendar:
3.06 Floor Rental: 16.85 Chair Rental: 4.32 Desk Rental: 4.43
Union Dues: 5.85 Union Dont's: 3.77 Cash Advances: 0.69 Cash
Retreats: 121.35 Overtime: 1.26 Undertime: 54.83 Eastern Time:
9.00 Central Time: 8.00 Mountain Time: 7.00 Pacific Time: 6.00
Grenwich Mean Time: 24.00 Bathroom Time: 6.05 Time Out:
12.21 Oxygen: 10.02 Water: 16.54 Electricity: 38.23 Heat: 51.42
Misc.: 144.38 Air Conditioning: 46.83 --------- Total, all
Deductions $1,222.00
Take Home Pay: $0,000.02
http://www.connectionsforsuccess.com/quiz/slideshow.asp?quiz_id=166
Instructions: Click on the correct choice. Click 'Next' for another question.
Paychecks Pre-Test True or False
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Your gross pay will always be larger than your net pay.
It is possible for my net pay to be more than your gross
pay.
When an employer offers you benefits, it can save you $.
Employers will take out federal, state, and city taxes from
your paycheck.
Legally, you can choose not to pay taxes.
Social Security Taxes = FICA
A pay stub and a paycheck are the same thing.
A pay period can be weekly, bimonthly, or monthly.
Deductions on your paycheck are for sick pay and
vacations.
Taxes are a deduction for only some employees.
For many people, the day they get their first
paycheck at a new job is a time for celebration!
But remember, new employees do not always
get a paycheck on the first payday after they
start work. It may take longer for the
paperwork to go through. Many offices will give
you a schedule of the dates your receive your
pay.
Most people get paid once a week, once every two
weeks, or once a month. Your paycheck usually
includes two parts. The first part is the actual
check you take to the bank or cash. The check
is usually your net pay or take-home pay.
http://www.floridatechnet.org/inservice/fw/mod9tw2.pdf
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When you get your first paycheck, be sure
to check it over to make sure you
understand each item that has been
deducted. Take your paycheck to your
supervisor or payroll right away if there is
a problem, so they can get it straightened
out.
When you receive your first paycheck, it is an exciting
experience. You worked a forty-hour week at ten dollars
an hour, so you are expecting a $400 paycheck, right? Not
exactly. It is true that a paycheck shows how many hours
worked and the wage that you should receive, but it also
shows what taxes you pay and any other items that you
pay for through your paycheck. This section will cover
some of the most important information that you will find
on your paycheck and/or pay stub.
Money Vocabulary
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A paycheck is a check issued to an employee as
payment for salary or wages. It is the paper that you use
to cash your check or deposit it in the bank.
A pay stub is a printed statement of the amount an
employee is paid, showing deductions for tax, social
security, and insurance. Pay stubs are an excellent way
to keep track of how much money you earn, to track
how many hours you work, and to record what is taken
out of your paycheck. Employees who have their
paychecks sent directly to their bank (called direct
deposit) use their pay stubs as a receipt that they have
been paid by their employer.
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When do I get paid, and how much?
Employees receive paychecks every pay period.
Most of the time the employer determines the pay
period. It may be daily, weekly, or monthly.
Sometimes an employee can choose when they
receive their paychecks.
Your paycheck should list the amount of money
earned for the current pay period and the total
amount of money earned in a calendar year
(January to December), called the year to date
earnings. You need to understand the difference
between gross pay and net pay to find out how
much money is earned on a paycheck.
More Vocabulary
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Gross Income: Your gross income is your total pay
before anything is taken out. It includes any
overtime, paid vocation time, or paid sick time you
have earned.
Net Income: Your net income is the amount you
are paid after deductions. This is your take-home
pay.
Income to Date: Most paycheck studs will add up
how much you have made so far during the
calendar year.
Pay Rate: Your pay rate includes the amount you
are paid. It is usually listed here by the hour.
Just more Vocabulary
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Deductions: All the additional money taken out
of your paycheck will be listed as deductions.
These include the benefits and deductions
described in Teamwork 2, such as federal tax,
FICA, health insurance, retirement, and other
deductions. http://www.runet.edu/~pers-web/forms/paystub.pdf
Pay period: The pay period usually list the
beginning and ending dates of the period for
which you are being paid. You should check this
carefully to make sure you are being paid for all
the time you have worked.
Karen’s story
Karen’s First Paycheck
Citizen’s Grocery
Bank of Daytona Beach
PAY TO THE ORDER OF:
Karen Rice
No. 3000413854
Date 9/11/04
Four Hundred and eight dollars and 78 cents.
Pay this amount $408.78
Not good after 90 days from date of issue
Earnings Statement
Keep this Document with your Income Tax Records
Name: Karen Rice
Social Security Number: 571-20-3111
Check no. 3000713854
Current Pay Rate $6.25
Hours Worked Amounts Earnings
Regular 80.00
Overtime 0.00
500.00
0.00
Pay Period: 8/30/04-9/11/04
Dedications
Current
Federal Taxes
FICA
Health Insurance
Dental Plan
Life Insurance
to date
22.00
43.22
20.00
5.00
10.00
22.00
43.22
20.00
5.00
10.00
Gross Pay $500.00 – Deductions 91.22 = Net Pay 408.78
Deductions, Reductions, and taxes
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In tax law, a deduction is an amount that you can
subtract from the total amount on which you owe
tax. An example would be wages deducted for child
support.
A reduction is an amount that you can subtract from
your paycheck before without it being taxed, like
health care.
Taxation is used by the government and the state to
raise money. This money, or revenue, is used many
times to pay for services for the public that may not
be paid for entirely by an individual alone. A good
example of this would be health care and welfare
services.
Benefits
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Benefits are payments (other than a paycheck) or other
benefits (health insurance) given to employees by
employers. Benefits may be required by law, offered by an
employer, or requested by employees as a group through
collective bargaining. The following are examples of
employee benefits.
Paid holidays
Paid personal leave
Paid military leave
Paid and unpaid family leave
Short term disability insurance
Long-term disability insurance
Defined benefit pension plans
Defined contribution plans
Flexible benefit plans
Reimbursement accounts
Wellness programs
Ride-share programs
*Paid vacations
*Paid funeral leave
*Paid jury-duty leave
*Paid sick leave
* Medical care
*Dental care
*Life insurance
* Vision care
*Travel pay
*Child care
*Educational assistance
W-4 Forms
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http://www.irs.gov/pub/irsfill/fw4_03.pdf
Withholding Income Tax From Your Paycheck
The amount of income tax your employer withholds from your regular
pay depends on two things:
The amount you earn
The information you give your employer on Form W-4 (and DE 4, if
desired).
Form W-4 includes three types of information that your employer will
use to figure your withholding.
Whether to withhold at the single rate or married rate.
How many withholding allowances you claim (each allowance reduces
the amount withheld).
Whether you want an additional amount withheld.
If your income is low enough that you will not have to pay income tax
for the year, you may be exempt from withholding. See ‘Resources’
below for more information.
NEW Job
When you start a new job, you must fill out Form W-4 (and DE 4, if
desired) and give it to your employer. Your employer should have the
forms. If you later need to change the information you gave, you must
fill out a new form.
What are Social Security taxes?
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Take a look at your pay stub—the part that shows
how much is taken out for the various taxes and
benefits each pay period. One of those deductions
is for Social Security and Medicare taxes. On some
pay stubs it's called FICA, which stands for
“Federal Insurance Contributions Act,” the
law that authorized payroll deductions for Social
Security.
Social Security is part of almost everyone's life.
Social Security protects more than 150 million
workers and pays benefits to more than 45 million
people.
Here's what you and your employer are
buying with your Social Security taxes:
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Retirement coverage—benefits paid monthly
to eligible retired workers as early as age 62;
Disability coverage—benefits paid monthly to
eligible workers, all ages who have a severe
disability;
Family coverage—benefits paid monthly to the
spouses and children (including dependent adults
who have been disabled since childhood) of
eligible retired and disabled workers;
Survivors coverage—benefits paid monthly to
the eligible widow/widower and children of a
deceased worker; and
Medicare benefits—help with hospital bills, as
well as limited coverage of skilled nursing facility
stays
Where Your Social Security Taxes Go
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Out of every dollar that workers and their employers
pay in Social Security taxes:
85 cents goes to a trust fund that pays for monthly
benefits to retirees and their families and to widow,
widowers and children of workers who have died;
and
15 cents goes to a trust fund that pays benefits to
people with disabilities and their families.
Your Social Security taxes also pay for administering
Social Security. How Social Security works is based
on a simple process. While you work, you pay taxes
into Social Security and when you retire or become
disabled, you (and your family members) collect
monthly benefits from Social Security. Or when you
die, your family may collect survivors benefits.
Federal Income TaxFederal Income Tax (FIT) An employer is
required to withhold a specified amount or
percentage from each payment of wages to each
employee to collect currently the approximate
federal income tax liability owed on those wages.
The number of withholding exemptions claimed
by the employee is taken into account in
calculating the amount withheld
State Taxes
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State taxes are used to fund programs that
help the state and its residents. State highways
and transportation projects, like the new system
of bridges going up across the river, receive tax
dollars. Universities and schools also get funding
from the state, along with the state law
enforcement system, including state courts,
prisons, and police. The state pays for welfare
and special services programs. We also fund
state parks and recreation, and oversee
professional license programs, given to such
groups as drivers, doctors, lawyers, and barbers,
to make sure they maintain proper standards of
conduct and safety.
Vocabulary
Quiz
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Gross Pay
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Earnings
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Benefits
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Net Pay
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Deductions
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Rate
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A.
B.
C.
D.
E.
F.
G.
Federal
income tax
FICA /
Medicare
H.
The amount of money that you have left to
take home on your paycheck after all the
deductions are removed.
Money paid from your paycheck to the US
government.
Money taken from your paycheck, paid to
the government, then sent as a monthly
check to senior citizens.
The money that you make, or earn, at
work.
Your hourly pay or wage.
The total amount of money you made
during a pay period.
Extra that the company pays besides what
you earn at work, like sick pay, health
insurance, paid vacation days, a retirement
plan, etc.
Money taken from your paycheck for health
insurance, city, state, and federal taxes,
disability insurance, and anything else.
How many hours did you work this pay period?
What was your regular pay? Overtime pay?
What was the amount of your gross earnings?
How much was withheld for federal income tax? State
income tax?
How much was deducted for social security?
What was the amount withheld for insurance?
What were the total deductions for this pay period?
What percent of your gross pay was withheld?
If you work the same number of hours for the next 3 weeks,
what will be your total net pay for the month?
Why is it important to check your pay statement and keep it
for your records?
YOUR FIRST PAYCHECK HAS FINALLY
ARRIVED!
DECISIONS..DECISIONS..DECISIONS...
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http://www.macomb.k12.mi.us/wq/cg2ucs.htm
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Web quest
Resources:
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http://www.macomb.k12.mi.us/wq/cg2ucs.htm
http://www.connectionsforsuccess.com/quiz/match.asp?
quiz_id=172
http://www.runet.edu/~persweb/forms/paystub.pdf
http://www.lake.k12.fl.us/stw/Lesson%20Plans/paychec
k.html
http://www.tax.ca.gov/paycheckind.html#Top