Futures II
Unit 2
Earnings & Taxes
Mr. Belolan
Objectives
Determine importance of payroll
accounting
Explain types of deductions from
employees’ gross earnings
Prepare a payroll register, employees
record
Identify tax reports that are prepared
regularly by the employer
Introduction
Question: For those of you who receive
a paycheck for a job, what are some
deductions?
FICA, state, local
Is that the employer’s money?
Basic Terms
1. Payroll -- list of all employees and
payments due
2. Pay Period -- amount of time for
which you are paid
3. Payroll Clerk -- person who prepares
payroll
Terms Continued
1. Gross Earnings -- total money earned
2. Net Earnings -- your pay after taxes;
-- “Take Home Pay”
Gross Pay Example
You make $7.15 per
hour
You worked 35
hours this week
How much is your
gross pay?
$7.15 x 35 =
$250.25
Types of Pay
1. Salary -- fixed amount yearly
2.
3.
4.
5.
-- unlimited hours worked
Hourly Wage -- pay per hour
Piece Rate -- paid per unit produced
Commission -- pay is % of sales
Overtime -- pay for hours beyond
regular work week (usually 40hr/wk)
Workbook Example
Work in Pairs
Time Frame = 5 minutes
Complete numbers 1-4, page one
Overtime Pay
What is the typical overtime pay
rate?
Time and one half (1 ½)
EX: If you make $10/hr, your
overtime rate is $10 x 1.5 = $15/hr!
Can you make more?
Examples?
Deductions
Federal Income Tax
Based on annual income
Employer “holds” money for government
aka: holding agent
Depends on marital status, number of
exemptions and gross income
FICA
FICA
Federal Insurance Contributions Act
Social Security Deduction is 6.20%
Medicare Deduction is 1.45%
Tax combines both Social Security and
Medicare deductions (total 7.65%)
State and Local Taxes
Local Tax = 1.55% for residents of
Central Columbia School District (1.05%
to school and .50% to municipality)
State Income Tax = Varies by State,
PA is 3.7%
Review
What is the difference between gross
and net income?
Name three types of pay.
What two taxes does FICA cover?