chapter 2 net pay. 2.1 deductions from gross pay

31
Chapter 2 Net Pay

Upload: angel-shelton

Post on 18-Dec-2015

275 views

Category:

Documents


4 download

TRANSCRIPT

Page 1: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

Chapter 2 Net Pay

Page 2: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

2.1 Deductions from Gross Pay

Page 3: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

Federal Withholding Tax Deduction

• Deductions-Subtractions from gross pay

• Withholding taxes-income taxes

• Amount of taxes depends on:– Wages– Marital status– Number of withholding allowances claimed

• Withholding allowance-used to reduce the amount of tax withheld

Page 4: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

Social Security & Medicare Tax Deductions

• FICA benefits include:– Disability benefits– Medicare– Retirement benefits– Survivor’s benefits

• Social Security is 6.2% for first $87,900

• Medicare is 1.45% for all wages

• Combined FICA is 7.65% (6.2% + 1.45%)

Page 5: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

C. $24,000 x 0.0765 =

D. $87,900 x 0.062 =

$89,000 x 0.0145 =

E. $460 x 0.0765 =

F. $712.44 x 0.0765 =

G. $1,087.30 x 0.0765 =

H. $375.88 x 0.0765 =

Page 6: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

Total Deductions and Net Pay

• Withholding Taxes

• Social Security

• Medicare

• Other Deductions

• Net Pay = Take Home Pay

• Gross Pay – Deductions = Net Pay

Page 7: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

I. $410 x 0.0765 =

$410 – 39 – 31.37 - 34.88 - 40 =

J. $820 x 0.0765 =

$810 – 118 – 61.97 – 74 – 45 =

Page 8: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

2.2 Benefits and Expenses

Page 9: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

Total Job Benefits

• Employee benefits – Fringe benefits

• What are some examples of job benefits?

Page 10: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

• Benefit 1 + Benefit 2 = Total Employee

Benefits

Benefit Rate x Gross Pay = Total Employee

Benefits

Gross Pay = Employee = Total Job Benefits Benefits

Page 11: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

• A. 1. $2,580 + $3,133 + $2,545 =

2. $31,807 + $8,258 =

B. $28,089 x 0.33 =

28,089 + 9,269.37 =

Page 12: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

Net Job Benefits

• Job Expenses - Examples

Total Job – Job Expenses = Net JobBenefits Benefits

C. $56,102 – 329-278-475-1,077 =

D. 78,299-580-1,793-2,057 =

Page 13: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

Comparing Net Job Benefits

E. Job 1 41,700 x 0.32.5 =

41,700 + 13,552.5 =

55,252.50 – 3,180 =

Job 2 45,260 x 0.24 =

45,260 + 10,862.40 =

56,122.40 – 3,740 =

Page 14: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

F. Job 1 49,500 x 0.29 =

49,500 +14,355 =

63,855 – 650-1,890-375-480 =

Job 2

45,200 x 0.34 =

45,200 + 15,368 =

60,568 – 2,560 – 480 – 590 – 380 =

Page 15: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

2.3 Federal Income Taxes

Page 16: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

Adjusted Gross Income and Taxable Income

• From 2.1 – withholding taxes taken out of paycheck every pay period

• Dec 31 end of year and federal income tax returns prepared for April 15

• Tax returns based on income earned and taxes due

• Withholding taxes are used here

Page 17: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

• Gross Income – Total income in a year

Adjustments are subtracted from income. Include business losses, payment to retirement plan, alimony and certain penalties.

Adjusted Gross = Gross Income – Adjustments

Income to Income• Taxable Income – income you actually pay taxes on

Taxable = Adjusted Gross - Deductions &

Income Income Exemptions

Page 18: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

• Deductions – Expenses that reduce the amount of your taxable income

• Which is more standard deductions or itemized, use the bigger of the two.– Standard deductions:

• $4,850 for individual• $9,700 for married filing jointly

• Exemption is an amount of income per person that is tax free– $3,100 per person

Page 19: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

A. AGI 65,000

- Ded 4,850

- Exe 3,100

Tax Inc

B. AGI 50,000

- Ded 10,500

- Exe 9,300

Tax Inc

Page 20: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

Income Tax Due

• Get a refund if paid too many taxes – remember withholding taxes from paychecks

• Pay in if didn’t pay enough taxes through the year

• Use the tax tables on pg. 56

Page 21: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

C. From tax table 1,679

2,340 – 1,827 = refund or pay in?

D. 2,874 from tax table

2,874 – 2,509 = refund or pay in?

Page 22: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

2.4 State and City Income Taxes

Page 23: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

State and City Flat Income Tax

• Flat tax is the same tax to everyone usually stated as a % of earnings

A. 34,100 x 0.015=

B. 29,900 x 0.028 =

Page 24: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

State & City Graduated Income Taxes

• As your income goes up the amount of taxes you pay goes up

C. 43,600 - 40,000 =3,600 x 0.07 = 1,600 + 252 = D. 38,200 – 32,000 = 6,200 x 0.06 = 1,120 + 372 =

Page 25: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

2.5 Cash Receipts and Payment Records

• Cash receipts records – Written records of $ received

A. Date Explanation Amount May 1 Interest from Savings +27.89 2 Birthday Gifts +75.00 3 Jose’s pay +745.98 3 Louisa’s pay +635.78 5 Received rebate +50.00

Page 26: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

• B. 154.40 +83.75+190.45+275.90+

150.80 =

Page 27: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

Columnar Cash Payments Record

• Cash payments are written records of $ paid out

C. 27.88+95.85+4.50+54.91+135.67+25+

47.89 =

D. 700+123.83+62.28+70+52.76+100=

Page 28: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

2.6 Budgets

Page 29: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

Expense Percentages

• Summarize expenses and receipts with percentages

• Helps to compare past, present, and future

• Can use specific categories to help with spending

Page 30: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

A. 6,400 / 128,000 =

B. 338,200 / 475,000 =

Page 31: Chapter 2 Net Pay. 2.1 Deductions from Gross Pay

Budgeting

• Budgets are future spending plansC. 0.05 x 4,500,000 = D. 0.025 x 5,489 =

Fixed IncomeVariable IncomeFixed ExpensesVariable Expenses