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Pay and Taxes INVESTIGATE WHAT IMPACTS YOUR PAYCHECK AND PERSONAL TAXES ©2014 National Endowment for Financial Education | Lesson 3-3: Pay and Taxes
Kevin’s Paycheck How much did Kevin earn? Last month he worked 60 hours at $6.50 an hour. How does this compare with what he actually takes home? ©2014 National Endowment for Financial Education | Lesson 3-3: Pay and Taxes 2 Calculating Income Kevin’s Monthly Pay Regular Pay +Tips =Gross Pay -Payroll Taxes$ 77 -Other Deductions =Net Pay Calculating Income Kevin’s Monthly Pay Regular Pay$ 390 +Tips$ 148 =Gross Pay$ 538 -Payroll Taxes$ 77 -Other Deductions$ 21 =Net Pay$ 440
Preview Today we will answer these questions: Why don’t I get all of my pay? How are payroll taxes calculated? Do I have any control over the amount of my net pay? Use what you learn today to maximize your pay options. ©2014 National Endowment for Financial Education | Lesson 3-3: Pay and Taxes 3
Income Taxes for Individuals Calculated as a percentage of your taxable income Taxable income = gross pay minus any pre-tax deductions (examples: retirement plan contributions, qualifying insurance premiums) Federal Income Tax State Income Tax Local Income Tax ©2014 National Endowment for Financial Education | Lesson 3-3: Pay and Taxes 4
Social Security & Medicare Contributions Calculated as a percentage of your total earned income. ©2014 National Endowment for Financial Education | Lesson 3-3: Pay and Taxes 5
Financial Decisions When Starting a Job Pay – Will your earnings fit into your spending plan? Paycheck – Do you want to automatically deposit your paycheck to savings or receive it in person? Employee Benefits – Which insurance plan best fits your situation? – How much will you contribute to a retirement or insurance savings program? – Do you have the automatic payroll deduction option for any of your regular expenses? Withholding Allowance – How much income tax is withheld from each paycheck? ©2014 National Endowment for Financial Education | Lesson 3-3: Pay and Taxes 6
W-4 Withholding Certificate ©2014 National Endowment for Financial Education | Lesson 3-3: Pay and Taxes 7
Youth Work Permits Abide by Child Labor Laws in Your State Required in some states before anyone under the age of 18 is allowed to work. (exceptions: agriculture or domestic service work) Employers must have a work permit on file minor allowed to begin work. Obtain a work permit from permit officer at school or job center. Present the following to get a permit: – Proof of age – Letter from the employer stating job duties and work schedule – Letter from the minor’s parent or guardian consenting to the employment – Minor’s Social Security card – Permit fee – Address of school that the minor attends Reasons to revoke work permit: – Minor does not attend school on a regular basis – Minor is working in a prohibited employment situation ©2014 National Endowment for Financial Education | Lesson 3-3: Pay and Taxes 8
What is Your Net Pay? Given: Receive an annual salary of $30,000 Paid twice a month (24 payments a year) Deduct income taxes and union dues What is your gross pay per paycheck? What is your net pay per paycheck? ©2014 National Endowment for Financial Education | Lesson 3-3: Pay and Taxes 9
Challenge Identify potential job options that match your work preferences. ©2014 National Endowment for Financial Education | Lesson 3-3: Pay and Taxes 10
© 2010 Prentice Hall Business Publishing, College Accounting: A Practical Approach, 11e by Slater Calculating Pay and Payroll Taxes: The Beginning of the.
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Pay and Taxes INVESTIGATE WHAT IMPACTS YOUR PAYCHECK AND PERSONAL TAXES ©2012 National Endowment for Financial Education | Lesson 3-3: Pay and Taxes 1.
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