Understanding your Pay Understanding your Pay CheckCheck

= = = "Understanding Your Paycheck" = = = = = = "Understanding Your Paycheck" = = = WOODEN NICKELWOODEN NICKEL

Gross pay: $1,222.02Gross pay: $1,222.02

Deductions: ----------- Income Tax: 244.40 Outgo Tax: 45.21 Deductions: ----------- Income Tax: 244.40 Outgo Tax: 45.21 State Tax: 61.10 Interstate Tax: 5.89 County Tax: 6.11 City Tax: 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: 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: 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 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: 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 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: Insurance: 16.23 Disability: 2.50 Ability: .25 Liability Insurance: 3.41 Dental Insurance: 4.50 Mental Insurance: 4.33 3.41 Dental Insurance: 4.50 Mental Insurance: 4.33 Reassurance: 0.11 Coffee: 6.85 Coffee Cups: 66.51 Calendar: 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 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 Union Dues: 5.85 Union Dont's: 3.77 Cash Advances: 0.69 Cash Retreats: 121.35 Overtime: 1.26 Undertime: 54.83 Eastern Retreats: 121.35 Overtime: 1.26 Undertime: 54.83 Eastern Time: 9.00 Central Time: 8.00 Mountain Time: 7.00 Pacific 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: 6.00 Grenwich Mean Time: 24.00 Bathroom Time: 6.05 Time Out: 12.21 Oxygen: 10.02 Water: 16.54 Electricity: 38.23 Time Out: 12.21 Oxygen: 10.02 Water: 16.54 Electricity: 38.23 Heat: 51.42 Misc.: 144.38 Air Conditioning: 46.83 --------- Total, Heat: 51.42 Misc.: 144.38 Air Conditioning: 46.83 --------- Total, all Deductions $1,222.00all Deductions $1,222.00

Take Home Pay: $0,000.02Take Home Pay: $0,000.02

http://www.connectionsforsuccess.com/quiz/slideshow.asp?quiz_id=1http://www.connectionsforsuccess.com/quiz/slideshow.asp?quiz_id=16666 Instructions:Instructions: Click on the correct choice. Click 'Next' for another question.Click on the correct choice. Click 'Next' for another question.

Paychecks Pre-TestPaychecks Pre-Test True or False True or False

1.1. Your gross pay will always be larger than your net Your gross pay will always be larger than your net pay.pay.

2.2. It is possible for my net pay to be more than your It is possible for my net pay to be more than your gross pay. gross pay.

3.3. When an employer offers you benefits, it can save When an employer offers you benefits, it can save you $. you $.

4.4. Employers will take out federal, state, and city taxes Employers will take out federal, state, and city taxes from your paycheck. from your paycheck.

5.5. Legally, you can choose not to pay taxes. Legally, you can choose not to pay taxes. 6.6. Social Security Taxes = FICA Social Security Taxes = FICA 7.7. A pay stub and a paycheck are the same thing. A pay stub and a paycheck are the same thing. 8.8. A pay period can be weekly, bimonthly, or monthly. A pay period can be weekly, bimonthly, or monthly. 9.9. Deductions on your paycheck are for sick pay and Deductions on your paycheck are for sick pay and

vacations. vacations. 10.10. Taxes are a deduction for only some employees. Taxes are a deduction for only some employees.

http://www.floridatechnet.org/inservice/fw/mod9tw2.pdfhttp://www.floridatechnet.org/inservice/fw/mod9tw2.pdf

For many people, the day they get their first For many people, the day they get their first paycheck at a new job is a time for paycheck at a new job is a time for celebration! But remember, new celebration! But remember, new employees do not always get a paycheck employees do not always get a paycheck on the first payday after they start work. on the first payday after they start work. It may take longer for the paperwork to go It may take longer for the paperwork to go through. Many offices will give you a through. Many offices will give you a schedule of the dates your receive your schedule of the dates your receive your pay. pay.

Most people get paid once a week, once Most people get paid once a week, once every two weeks, or once a month. Your every two weeks, or once a month. Your paycheck usually includes two parts. The paycheck usually includes two parts. The first part is the actual check you take to first part is the actual check you take to the bank or cash. The check is usually the bank or cash. The check is usually your net pay or take-home pay.your net pay or take-home pay.

When you get your first paycheck, be When you get your first paycheck, be sure to check it over to make sure sure to check it over to make sure you understand each item that has you understand each item that has been deducted. Take your paycheck been deducted. Take your paycheck to your supervisor or payroll right to your supervisor or payroll right away if there is a problem, so they away if there is a problem, so they can get it straightened out.can get it straightened out.

When you receive your first paycheck, it is an When you receive your first paycheck, it is an exciting exciting experienceexperience. You worked a forty-hour week . You worked a forty-hour week at ten dollars an hour, so you are expecting a $400 at ten dollars an hour, so you are expecting a $400

paycheck, right? Not exactly. It is true that a paycheck, right? Not exactly. It is true that a paycheck shows how many hours worked and the paycheck shows how many hours worked and the wage that you should receive, but it also shows wage that you should receive, but it also shows

what taxes you pay and any other items that you what taxes you pay and any other items that you pay for through your paycheck. This section will pay for through your paycheck. This section will

cover some of the most important information that cover some of the most important information that

you will find on your paycheck and/or pay stub.you will find on your paycheck and/or pay stub.

Money VocabularyMoney Vocabulary A paycheckA paycheck is a check issued to an employee as is a check issued to an employee as

payment for salary or wages. It is the paper that payment for salary or wages. It is the paper that you use to cash your check or deposit it in the bank. you use to cash your check or deposit it in the bank.

A pay stubA pay stub is a printed statement of the amount is a printed statement of the amount an employee is paid, showing deductions for tax, an employee is paid, showing deductions for tax, social security, and insurance. Pay stubs are an social security, and insurance. Pay stubs are an excellent way to keep track of how much money excellent way to keep track of how much money you you earnearn, to track how many hours you work, and , to track how many hours you work, and to record what is taken out of your paycheck. to record what is taken out of your paycheck. Employees who have their paychecks sent directly Employees who have their paychecks sent directly to their bank (called to their bank (called direct depositdirect deposit) use their pay ) use their pay stubs as a receipt that they have been paid by their stubs as a receipt that they have been paid by their

employer.employer.

When do I get paid, and how much?When do I get paid, and how much? Employees receive paychecks every Employees receive paychecks every pay periodpay period. .

Most of the time the employer determines the Most of the time the employer determines the pay period. It may be daily, weekly, or monthly. pay period. It may be daily, weekly, or monthly. Sometimes an employee can choose when they Sometimes an employee can choose when they receive their paychecks. receive their paychecks.

Your paycheck should list the amount of money Your paycheck should list the amount of money earned for the current pay period and the total earned for the current pay period and the total amount of money earned in a calendar year amount of money earned in a calendar year (January to December), called the (January to December), called the year to date year to date earningsearnings. You need to understand the difference . You need to understand the difference between gross pay and net pay to find out how between gross pay and net pay to find out how much money is earned on a paycheck. much money is earned on a paycheck.

More VocabularyMore Vocabulary Gross IncomeGross Income: Your gross income is your total : Your gross income is your total

pay before anything is taken out. It includes any pay before anything is taken out. It includes any overtime, paid vocation time, or paid sick time overtime, paid vocation time, or paid sick time you have earned.you have earned.

Net Income:Net Income: Your net income is the amount you Your net income is the amount you are paid after deductions. This is your take-home are paid after deductions. This is your take-home pay.pay.

Income to Date:Income to Date: Most paycheck studs will add Most paycheck studs will add up how much you have made so far during the up how much you have made so far during the calendar year.calendar year.

Pay Rate:Pay Rate: Your pay rate includes the amount Your pay rate includes the amount you are paid. It is usually listed here by the hour.you are paid. It is usually listed here by the hour.

Just more VocabularyJust more Vocabulary Deductions:Deductions: All the additional money taken All the additional money taken

out of your paycheck will be listed as out of your paycheck will be listed as deductions. These include the benefits and deductions. These include the benefits and deductions described in Teamwork 2, such deductions described in Teamwork 2, such as federal tax, FICA, health insurance, as federal tax, FICA, health insurance, retirement, and other deductions. retirement, and other deductions. http://www.runet.edu/~pers-web/forms/paystub.pdfhttp://www.runet.edu/~pers-web/forms/paystub.pdf

Pay period:Pay period: The pay period usually list the The pay period usually list the beginning and ending dates of the period for beginning and ending dates of the period for which you are being paid. You should check which you are being paid. You should check this carefully to make sure you are being this carefully to make sure you are being paid for all the time you have worked.paid for all the time you have worked.

Karen’s storyKaren’s storyKaren’s First PaycheckKaren’s First Paycheck

Citizen’s Grocery Bank of Daytona Beach No. Citizen’s Grocery Bank of Daytona Beach No. 3000413854 3000413854

PAY TO THE ORDER OF: Karen Rice Date 9/11/04PAY TO THE ORDER OF: Karen Rice Date 9/11/04

Four Hundred and eight dollars and 78 cents. Pay this amount Four Hundred and eight dollars and 78 cents. Pay this amount $408.78$408.78

Not good after 90 days from date of issueNot good after 90 days from date of issue

Earnings StatementEarnings StatementKeep this Document with your Income Tax RecordsKeep this Document with your Income Tax Records

Name: Karen Rice Social Security Number: 571-20-3111Name: Karen Rice Social Security Number: 571-20-3111

Check no. 3000713854 Pay Period: 8/30/04-9/11/04Check no. 3000713854 Pay Period: 8/30/04-9/11/04

Current Pay Rate $6.25Current Pay Rate $6.25 DedicationsDedications

Hours Worked Amounts Hours Worked Amounts EarningsEarnings

CurrentCurrent to dateto date

Regular 80.00 500.00Regular 80.00 500.00

Overtime 0.00 0.00Overtime 0.00 0.00Federal Taxes 22.00Federal Taxes 22.00

FICA 43.22FICA 43.22

Health Insurance 20.00Health Insurance 20.00

Dental Plan 5.00 Dental Plan 5.00

Life Insurance 10.00Life Insurance 10.00

22.0022.00

43.2243.22

20.0020.00

5.005.00

10.0010.00

Gross Pay $500.00 – Deductions 91.22 = Net Pay Gross Pay $500.00 – Deductions 91.22 = Net Pay 408.78408.78

Deductions, Reductions, and taxesDeductions, Reductions, and taxes

In tax law, a deduction is an amount that you can In tax law, a deduction is an amount that you can subtract from the total amount on which you owe tax. subtract from the total amount on which you owe tax. An example would be wages deducted for child An example would be wages deducted for child support. support.

A reduction is an amount that you can subtract from A reduction is an amount that you can subtract from your paycheck before without it being taxed, like your paycheck before without it being taxed, like health care. health care.

Taxation is used by the government and the state to Taxation is used by the government and the state to raise money. This money, or raise money. This money, or revenuerevenue, is used many , is used many times to pay for services for the public that may not times to pay for services for the public that may not be paid for entirely by an individual alone. A good be paid for entirely by an individual alone. A good example of this would be health care and welfare example of this would be health care and welfare services.services.

BenefitsBenefits Benefits are payments (other than a paycheck) or other Benefits are payments (other than a paycheck) or other

benefits (health insurance) given to employees by benefits (health insurance) given to employees by employers. Benefits may be required by law, offered by an employers. Benefits may be required by law, offered by an employer, or requested by employees as a group through employer, or requested by employees as a group through collective bargainingcollective bargaining. The following are examples of . The following are examples of employee benefits. employee benefits.

Paid holidays Paid holidays *Paid vacations *Paid vacations Paid personal leave Paid personal leave *Paid funeral leave *Paid funeral leave Paid military leave Paid military leave *Paid jury-duty leave *Paid jury-duty leave Paid and unpaid family leave Paid and unpaid family leave *Paid sick leave *Paid sick leave Short term disability insurance Short term disability insurance * Medical care * Medical care Long-term disability insurance Long-term disability insurance *Dental care *Dental care Defined benefit pension plans Defined benefit pension plans *Life insurance *Life insurance Defined contribution plansDefined contribution plans * Vision care * Vision care Flexible benefit plans Flexible benefit plans *Travel pay *Travel pay Reimbursement accounts Reimbursement accounts *Child care *Child care Wellness programs Wellness programs *Educational assistance *Educational assistance Ride-share programs Ride-share programs

W-4 FormsW-4 Forms http://www.irs.gov/pub/irs-fill/fw4_http://www.irs.gov/pub/irs-fill/fw4_

03.pdf03.pdf

Withholding Income Tax From Your PaycheckWithholding Income Tax From Your Paycheck The amount of income tax your employer withholds from your The amount of income tax your employer withholds from your

regular pay depends on two things:regular pay depends on two things: The amount you earn The amount you earn The information you give your employer on Form W-4 (and DE The information you give your employer on Form W-4 (and DE

4, if desired). 4, if desired). Form W-4 includes three types of information that your Form W-4 includes three types of information that your

employer will use to figure your withholding.employer will use to figure your withholding. Whether to withhold at the single rate or married rate. Whether to withhold at the single rate or married rate. How many withholding allowances you claim (each allowance How many withholding allowances you claim (each allowance

reduces the amount withheld). reduces the amount withheld). Whether you want an additional amount withheld. Whether you want an additional amount withheld. If your income is low enough that you will not have to pay If your income is low enough that you will not have to pay

income tax for the year, you may be exempt from withholding. income tax for the year, you may be exempt from withholding. See ‘Resources’ below for more information.See ‘Resources’ below for more information.

NEW JobNEW Job When you start a new job, you must fill out Form W-4 (and DE 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 4, if desired) and give it to your employer. Your employer should have the forms. If you later need to change the should have the forms. If you later need to change the information you gave, you must fill out a new form.information you gave, you must fill out a new form.

What are Social Security taxes?What are Social Security taxes?

Take a look at your pay stub—the part that Take a look at your pay stub—the part that shows how much is taken out for the various shows how much is taken out for the various taxes and benefits each pay period. One of taxes and benefits each pay period. One of those deductions is for Social Security and those deductions is for Social Security and Medicare taxes. On some pay stubs it's Medicare taxes. On some pay stubs it's called FICAcalled FICA, which stands for “, which stands for “Federal Federal Insurance Contributions ActInsurance Contributions Act,” the law ,” the law that authorized payroll deductions for Social that authorized payroll deductions for Social Security.Security.

Social Security is part of almost everyone's Social Security is part of almost everyone's life. Social Security protects more than 150 life. Social Security protects more than 150 million workers and pays benefits to more million workers and pays benefits to more than 45 million people.than 45 million people.

Here's what you and your Here's what you and your employer are buying with your employer are buying with your

Social Security taxes:Social Security taxes: Retirement coverage—benefitsRetirement coverage—benefits paid monthly paid monthly to to eligibleeligible retired workers as early as age 62; retired workers as early as age 62;

Disability coverage—benefitsDisability coverage—benefits paid monthly paid monthly to eligible workers, all ages who have a severe to eligible workers, all ages who have a severe disability; disability;

Family coverage—benefitsFamily coverage—benefits paid monthly to paid monthly to the spouses and children (including dependent the spouses and children (including dependent adults who have been adults who have been disableddisabled since childhood) since childhood) of eligible retired and disabled workers; of eligible retired and disabled workers;

Survivors coverage—benefitsSurvivors coverage—benefits paid monthly paid monthly to the eligible widow/widower and children of a to the eligible widow/widower and children of a deceased worker; and deceased worker; and

Medicare benefits—helpMedicare benefits—help with hospital bills, as with hospital bills, as well as limited coverage of skilled nursing well as limited coverage of skilled nursing facility staysfacility stays

Where Your Social Security Taxes Where Your Social Security Taxes GoGo

Out of every dollar that workers and their Out of every dollar that workers and their employers pay in Social Security taxes: employers pay in Social Security taxes:

85 cents goes to a trust fund that pays for monthly 85 cents goes to a trust fund that pays for monthly benefits to retirees and their families and to widow, benefits to retirees and their families and to widow, widowers and children of workers who have died; widowers and children of workers who have died; and and

15 cents goes to a trust fund that pays benefits to 15 cents goes to a trust fund that pays benefits to people with disabilities and their families. people with disabilities and their families.

Your Social Security taxes also pay for Your Social Security taxes also pay for administering Social Security. How Social Security administering Social Security. How Social Security works is based on a simple process. While you works is based on a simple process. While you work, you pay taxes into Social Security and when work, you pay taxes into Social Security and when you retire or become disabled, you (and your you retire or become disabled, you (and your family members) collect monthly benefits from family members) collect monthly benefits from Social Security. Or when you die, your family may Social Security. Or when you die, your family may collect survivors benefits. collect survivors benefits.

Federal Income Tax-Federal Income Tax-

Federal Income Tax (FIT) Federal Income Tax (FIT) An employer is An employer is required to withhold a specified amount or required to withhold a specified amount or percentage from each payment of wages to percentage from each payment of wages to each employee to collect currently the each employee to collect currently the approximate federal income tax liability approximate federal income tax liability owed on those wages. The number of owed on those wages. The number of withholding exemptions claimed by the withholding exemptions claimed by the employee is taken into account in employee is taken into account in calculating the amount withheldcalculating the amount withheld

State Taxes State Taxes State taxesState taxes are used to fund programs that are used to fund programs that

help the state and its residents. State highways help the state and its residents. State highways and transportation projects, like the new and transportation projects, like the new system of bridges going up across the river, system of bridges going up across the river, receive tax dollars. Universities and schools receive tax dollars. Universities and schools also get funding from the state, along with the also get funding from the state, along with the state law state law enforcementenforcement system, including system, including state courts, prisons, and police. The state state courts, prisons, and police. The state pays for welfare and special services programs. pays for welfare and special services programs. We also fund state parks and recreation, and We also fund state parks and recreation, and oversee professional oversee professional licenselicense programs, given programs, given to such groups as drivers, doctors, lawyers, to such groups as drivers, doctors, lawyers, and barbers, to make sure they maintain and barbers, to make sure they maintain proper standards of conduct and safety.proper standards of conduct and safety.

VocabularVocabulary Quizy Quiz

Gross PayGross Pay

Earnings Earnings

BenefitsBenefits

Net Pay Net Pay

DeductionsDeductions

Rate Rate

Federal Federal income tax income tax

FICA / FICA / Medicare Medicare

A.A. The amount of money that you have The amount of money that you have left to take home on your paycheck left to take home on your paycheck after all the deductions are removed. after all the deductions are removed.

B.B. Money paid from your paycheck to the Money paid from your paycheck to the US government. US government.

C.C. Money taken from your paycheck, paid Money taken from your paycheck, paid to the government, then sent as a to the government, then sent as a monthly check to senior citizens. monthly check to senior citizens.

D.D. The money that you make, or earn, at The money that you make, or earn, at work. work.

E.E. Your hourly pay or wage. Your hourly pay or wage. F.F. The total amount of money you made The total amount of money you made

during a pay period. during a pay period. G.G. Extra that the company pays besides Extra that the company pays besides

what you earn at work, like sick pay, what you earn at work, like sick pay, health insurance, paid vacation days, a health insurance, paid vacation days, a retirement plan, etc. retirement plan, etc.

H.H. Money taken from your paycheck for Money taken from your paycheck for health insurance, city, state, and federal health insurance, city, state, and federal taxes, disability insurance, and anything taxes, disability insurance, and anything else. else.

How many hours did you work this pay period? How many hours did you work this pay period? What was your regular pay? Overtime pay? What was your regular pay? Overtime pay? What was the amount of your gross earnings? What was the amount of your gross earnings? How much was withheld for federal income tax? How much was withheld for federal income tax? State income tax? State income tax? How much was deducted for social security? How much was deducted for social security? What was the amount withheld for insurance? What was the amount withheld for insurance? What were the total deductions for this pay period? What were the total deductions for this pay period? What percent of your gross pay was withheld? What percent of your gross pay was withheld? If you work the same number of hours for the next 3 If you work the same number of hours for the next 3 weeks, what will be your total net pay for the month? weeks, what will be your total net pay for the month?

Why is it important to check your pay statement and Why is it important to check your pay statement and

keep it for your records?keep it for your records?

YOUR FIRST PAYCHECK HAS FINALLY YOUR FIRST PAYCHECK HAS FINALLY ARRIVED! ARRIVED!

DECISIONS..DECISIONS..DECISIONS..DECISIONS..DECISIONS..DECISIONS....

http://www.macomb.k12.mi.us/wq/cg2ucs.htmhttp://www.macomb.k12.mi.us/wq/cg2ucs.htm

Web questWeb quest

Resources:Resources:

http://www.macomb.k12.mi.us/wq/cg2ucs.htmhttp://www.macomb.k12.mi.us/wq/cg2ucs.htm http://www.connectionsforsuccess.com/quiz/matchttp://www.connectionsforsuccess.com/quiz/matc

h.asp?quiz_id=172h.asp?quiz_id=172 http://www.runet.edu/~persweb/forms/paystub.phttp://www.runet.edu/~persweb/forms/paystub.p

dfdf

http://www.lake.k12.fl.us/stw/Lesson%20Plans/pahttp://www.lake.k12.fl.us/stw/Lesson%20Plans/paycheck.htmlycheck.html

http://www.tax.ca.gov/paycheckind.html#Tophttp://www.tax.ca.gov/paycheckind.html#Top