Paychecks and Taxes
Forms of Payment:
Paycheck – Paper Check that is cashed or deposited into a checking
account
Direct Deposit – Employers directly deposit employee’s paycheck into the
authorized employee’s depository institution account
Payroll Card – A payroll card electronically carries the balance of the
employee’s net pay
Regulation E – Protects payroll card holder from fraudulent charges on lost
or stolen cards
Card holders are liable for…
Taxes – Compulsory charges imposed on citizens by local, state, and
federal governments.
IRS – Collects federal taxes, issues regulations, and enforces tax laws
written by the United States Congress.
W4 – Employee’s Withholding Allowance Certificate
Allowances – the amount of something that is permitted, especially within a
set of regulations or for a specified purpose.
Dependent – a person who relies on another person or organization for
support, aid, or sustenance, especially financial support
I-9 – Used to verify the eligibility of individuals to avoid hiring undocumented
workers or others who are not eligible to work in the United States
Reading a Paycheck
Paycheck Stub – A document included each pay period which outlines
paycheck deductions
On-The-Go
Employee SSN Check # Check Amount
Beakens, Joe 201-92-4856 164 $1,102.98
EmployeeAddress
293 Michael Grove
Billings, MT 59102
Pay Type- Deductions Current Year-to-date
Gross Pay
$1,353.33 Federal Withholding $106.00 $503.46
StateWithholding $40.82 $117.72
Fed OASDI/ EE or Social Security $83.91 $636.00
Fed MED/ EE or Medicare $19.62 $244.92
Medical $0.00 $0.00
401K $0.00 $0.00
Totals $250.35 $1,502.10
Pay Period 6/11/2004-7/11/2004
Pay Period – The length of time for Calculate Gross Pay (Over Time):
which an employee’s wages are _$7.75 __ (Hourly Rate)
calculated; most are weekly, bi-
X ______ 1.5 (time and a half)
weekly, twice a month, or monthly
= $11.62 (Overtime Rate)
Gross Pay The total amount of X 9.75 (Overtime Hours Worked)
money earned during a pay period
= $113.33 (Overtime Pay)
before deductions
Calculate Gross Pay (Straight Time): + $1,353.33(Straight Time)
_$8.45_ (Hourly Rate) = $1,466.66 (Gross Pay)
X __160_ (Hours Worked)
= $1,353.33(Gross Pay)
Salary – a fixed regular payment, earned wages to pay taxes
typically paid on a monthly
or biweekly basis but often
expressed as an annual sum, State Withholding Tax – The
made by an employer to an percentage deducted from an
employee, especially a individual’s paycheck to assist in
professional or white-collar worker funding government agencies
within the state
Calculate Gross Pay (Salary):
$16239.96 (Yearly Salary)
FICA – Federal Insurance
/ __12__ (of Pay Periods/Year)
Contributions Act
= _$1353.33 (Gross Pay)
Net Pay – the amount of money an Social Security – any government
employee receives after deductions system that provides monetary
and withholdings are taken out of assistance to people with
their gross pay an inadequate or no income.
Deductions – the action __ 1.45_%
of deducting or subtracting somethi Medicare – Based upon a
ng. percentage of gross income
______%
Federal Withholding Tax – Medical –
The amount required by law
for employers to withhold from 401K – retirement savings plan
Paycheck Math
1. 1,523 X 52 = 79,196
2. 47 - 40 = 7
40 X 10 = 400
7 X (10 X 1.5) = 105
400 + 105 = 505
3. 40 X 15 = 600
600 - 70-13 = 517
4. 562 X .062 = 34.84
562 X .0145 = 8.149
34.84 + 8.149 = 42.99
Paying Taxes
1040 Tax Filing Form
Use the W-2 from your employer.
1040EZ
Income - money received, especially on a regular basis, for work or through
investments
Spending Plans
Draw the Spending Plan Pie Chart
What are the five steps of Budgeting?
1. Determine your income
2. List your expenses
3. Calculate your budget
4. Track your progress
5. Make adjustments
Step 1 –
Tracking Methods include:
1.
2.
3.
4.
Tracking Food
Assign Tracking Expenses Project
Step 2 –
Housing –
Monthly Payment (__________) –
Utilities –
Transportation –
Monthly Payment (__________) –
Food/Misc. –
Insurance –
Additional Expenses
Savings and Investing –
Charitable Contributions –
Step 3 –
Step 4 –
Spending Plan Control Methods:
1.
2.
Step 5 –
Revenue
Net Worth
Flexible Expenses
Fixed Expenses
Net Worth – Amount you are worth
after adding both the liabilities and
Assets – something that you own assets
that has financial value
Liabilities – the state of being
responsible for something,
especially by law
Paying Expenses - Spending Plan (can be done in the Portfolio)
Checking Account
Date Description Income Expense Balance
Opening Balance $183.54
Saving Account
Date Description Income Expense Balance
Opening Balance $1,783.24
Investing Account
Date Description Income Expense Balance
Opening Balance $2,825.73
Housing Envelope
Date Description Income Expense Balance
Opening Balance $150.00
Transportation Envelope
Date Description Income Expense Balance
Opening Balance
Food/Misc. Envelope
Date Description Income Expense Balance
Opening Balance
Insurance Envelope
Date Description Income Expense Balance
Opening Balance $33.54
Charitable Contributions Envelope
Date Description Income Expense Balance
Opening Balance
Budgeting Math Simulation
Using the assigned “life,” calculate the answers to the following questions:
Teacher Auto Technician Associate Lab. Technician Computer
Professor Programmer
Date N.I. $3,411 N.I. $4,243 N.I. $5,750 N.I. $7,672 N.I. $8,728
3/2 Savings Savings Savings Savings Savings
3/2 Roth IRA Roth IRA Roth IRA Roth IRA Roth IRA
3/2 Charity Charity Charity Charity Charity
3/3 900 Rent 1,125 Rent 1,200 House 1,42 House 1,657 House
5
3/4 150 Food 225 Food 250 Food 350 Food 450 Food
3/5 75 Internet 75 Internet 85 Water 105 Water 120 Water
3/6 15 Ent 25 Ent 23 Trash 23 Trash 23 Trash
3/6 37 Fuel 56 Fuel 45 Ent 55 Ent 65 Ent
3/8 53 Ntl. Gas 70 Ntl. Gas 94 Fuel 113 Fuel 132 Fuel
3/10 65 Power 83 Power 105 Internet 120 Internet 120 Internet
3/11 60 Cell 60 Cell 88 Ntl. Gas 95 Ntl. Gas 120 Ntl. Gas
3/13 30 Rent Ins 40 Life Ins 90 Power 108 Power 125 Power
3/14 30 Life Ins 40 Life Ins 105 Cell 105 Cell 105 Cell
3/15 15 Ent 25 Ent 45 Ent 55 Ent 65 Ent
3/15 37 Fuel 56 Fuel 94 Fuel 113 Fuel 132 Fuel
3/15 30 Life Ins 105 Cell 105 Cell 105 Cell
3/15 125 Food 200 Food 225 Food 300 Food 450 Food
3/16 60 Cable 90 Cable 120 Cable
3/17 150 Car Ins(1) 45 Life Ins 45 Life Ins 55 Life Ins
3/19 150 Car Ins(1) 45 Life Ins 45 Life Ins 55 Life Ins
3/22 15 Ent 25 Ent 45 Ent 55 Ent 65 Ent
3/23 37 Fuel 56 Fuel 94 Fuel 113 Fuel 132 Fuel
3/25 150 C.C./S.L. 300 C.C./S.L. 175 C.C./S.L.
3/25 150 Car Ins (1) 150 Car Ins (1) 150 Car Ins (1)
3/26 250 Car Pmt (1) 375 Car Pmt (1) 425 Car Pmt (1)
3/28 15 Ent 25 Ent 45 Ent 55 Ent 150 Car Ins (2)
3/28 37 Fuel 56 Fuel 94 Fuel 113 Fuel 65 Ent
3/28 150 Car Ins (2) 150 Car Ins (2) 132 Fuel
Questions:
1. Which “life” where you assigned? Teacher Auto Tech. Assoc. Pro. Lab. Tech. Comp. Pro.
2. How much do you plan to give to Charity?
3. How much are you putting into your IRA? ___________________________________________________________
4. How much are you Saving? ______________________________________________________________________
5. What are your Total Expenses? ___________________________________________________________________
6. What is your available surplus (additional savings)? ___________________________________________________
7. Categorize your expenses (combine the expenses into the following categories)
Total Housing: ___________________________
Total Transportation: ______________________
Total Food/Misc.: _________________________
Total Insurance: _________________________
Total Charity: ____________________________
Total Saving: ____________________________
Total Retirement: _________________________
8. Calculate the percentage spent for each category (Expense / N.I.)
Percentage for Housing: ___________________
Percentage for Transportation: ______________
Percentage for Food/Misc.: _________________
Percentage for Insurance: __________________
Percentage for Charity: ____________________
Percentage for Saving: ____________________
Percentage for Retirement: _________________
9. Compare your spending to the supplied pie charts in the PowerPoint. Where do you over/under spend?
Housing (30%): On Over Under
Transportation (15%): On Over Under
Food/Misc. (10%): On Over Under
Insurance (5%): On Over Under
Charity (10%): On Over Under
Saving (20%): On Over Under
Retirement (10%): On Over Under
10. What WOULD you change for each of the following “Over Spending Issues” (you cannot simply “not-pay”)?
Housing: ______________________________________________________________________________
Transportation: _________________________________________________________________________
Food/Misc.: ____________________________________________________________________________
Insurance: _____________________________________________________________________________
Charity: _______________________________________________________________________________
Saving: ________________________________________________________________________________
Retirement: ____________________________________________________________________________________
