1. Careers Take-Home Pay Housing and Vehicle Allowance

2. B1: Gross Annual Income Gross means “before withholding, etc.” Gross means “before withholding, etc.” I will provide each of you with the gross annual income for your job. I will provide each of you with the gross annual income for your job.

3. B2: Personal Tax Exemption/Deduction In simple terms, you are allowed a $3650 exemption for each person in your household. In simple terms, you are allowed a $3650 exemption for each person in your household. You are also allowed a $5700 standard deduction, unless you choose to itemize deductions for expenses like student loan interest, mortgage interest, charitable contributions, etc. You are also allowed a $5700 standard deduction, unless you choose to itemize deductions for expenses like student loan interest, mortgage interest, charitable contributions, etc. For this class, enter $9350 in cell B2 For this class, enter $9350 in cell B2

4. B3: Taxable Income Your taxable income is what remains after your exemptions and deductions have been subtracted from your income. Your taxable income is what remains after your exemptions and deductions have been subtracted from your income. Formula for B3: Formula for B3:=B1-B2

5. Federal Tax Brackets People with different incomes are taxed at different rates. People with different incomes are taxed at different rates. Your taxable income will determine which tax bracket you fall into. Your taxable income will determine which tax bracket you fall into. Different tax brackets have different rates of taxation. Different tax brackets have different rates of taxation.

6. Federal Tax Brackets Tax Bracket Floor Tax Bracket Ceiling $0$8,350 $8,350$33,950 $33,950$82,250 $82,250$171,550 $171,550$372,950 $372,950 No ceiling

7. Federal Tax Brackets Tax Bracket Floor Tax Bracket $010% $8,35015% $33,95025% $82,25028% $171,55033% $372,95035%

8. Federal Tax Brackets All income that you earned above the floor for your tax bracket will be taxed at this percentage. All income that you earned above the floor for your tax bracket will be taxed at this percentage. At one time, the highest tax bracket was taxed at 90%. Now, the highest bracket is only taxed at 35%. At one time, the highest tax bracket was taxed at 90%. Now, the highest bracket is only taxed at 35%.

9. B4: Federal Income Tax This is the total amount of income tax you will owe to the federal government. This is the total amount of income tax you will owe to the federal government. Remember that you have money withheld from your paycheck to roughly cover your tax bill. Remember that you have money withheld from your paycheck to roughly cover your tax bill. If you had more withheld than you owe, you will receive a refund. If you had more withheld than you owe, you will receive a refund. If you had less withheld than you owe, you will have to pay the IRS the difference. If you had less withheld than you owe, you will have to pay the IRS the difference.

10. B4: Total Federal Income Tax You will determine your federal income tax using a web site calculator. Enter the result in cell B4. You will determine your federal income tax using a web site calculator. Enter the result in cell B4.

11. B5: South Carolina State Tax The state also has tax rates that vary with your tax bracket, from 2.5% to a maximum of 7% The state also has tax rates that vary with your tax bracket, from 2.5% to a maximum of 7% The South Carolina tax tables will be used to calculate your value for B5. The South Carolina tax tables will be used to calculate your value for B5.

12. B6: FICA tax FICA tax is withheld at a rate of 6.2% of your taxable income. FICA tax is withheld at a rate of 6.2% of your taxable income. Formula for B6: Formula for B6:=B3*0.062

13. B7: Medicare tax Medicare tax is withheld at a rate of 1.45% of your taxable income. Medicare tax is withheld at a rate of 1.45% of your taxable income. Formula for B7: Formula for B7:=B3*0.0145

14. B8: Total Taxes and Withholding This is the sum of the federal income tax (B4), state income tax (B5), FICA tax (B6), and Medicare tax (B7). This is the sum of the federal income tax (B4), state income tax (B5), FICA tax (B6), and Medicare tax (B7). Formulas for B8: Formulas for B8:=(B4+B5+B6+B7)or=sum(b4:b7)

15. B9: Annual Take-Home Pay Your “take-home pay” is what is left over after withholding. Your “take-home pay” is what is left over after withholding. Formula for B9: Formula for B9:=B1-B8

16. B10: Monthly Take-Home Pay This is what your monthly paycheck will be after taxes and withholding. This is what your monthly paycheck will be after taxes and withholding. The monthly take-home pay is the yearly take- home pay split up over 12 months. The monthly take-home pay is the yearly take- home pay split up over 12 months. Formula for B10: Formula for B10:=B9/12

17. B11: Maximum Housing Expense When considering you for a mortgage, banks will look at your total monthly income, as well as all other debts you have (student loans, car loans, credit card debt, etc.) When considering you for a mortgage, banks will look at your total monthly income, as well as all other debts you have (student loans, car loans, credit card debt, etc.) Banks often will only lend enough money so your mortgage payment (plus property taxes and insurance) will not be more than 30% of your gross monthly income. Banks often will only lend enough money so your mortgage payment (plus property taxes and insurance) will not be more than 30% of your gross monthly income.

18. B11: Maximum Housing Expense Formula for B11: Formula for B11:=(B1/12)*0.3

19. B12: Maximum Car Expense Formula for B12: =(B1/12)*0.12

20. B13: Mortgage Allowed Based on your maximum housing expense, you will use a web site to calculate the mortgage you can receive. Based on your maximum housing expense, you will use a web site to calculate the mortgage you can receive. The columns list different mortgage amounts based on different down payments. The columns list different mortgage amounts based on different down payments. You will use the column that reflects a 10% down payment. You will use the column that reflects a 10% down payment. Enter the result from the calculator in cell B13. Enter the result from the calculator in cell B13.

21. B14: Car Loan Allowed Based on your maximum car expense, you will use a web site to calculate the car loan you can receive. Based on your maximum car expense, you will use a web site to calculate the car loan you can receive. You will apply for a 5-year loan with a $2,000 down payment. Currently, rates for this loan are 6.45%. You will apply for a 5-year loan with a $2,000 down payment. Currently, rates for this loan are 6.45%. Enter the result from the calculator in cell B14. Enter the result from the calculator in cell B14.