1.3.4.G1 Paycheck Basics Take Charge Today Introductory Level

1.3.4.G1 What’s the best part about having your first job? Before payment occurs there are steps to complete. What do you plan to do with your first big paycheck? For many it’s the first paycheck.

© Take Charge Today – November 2014 – Paycheck Basics – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Methods for Paying Employees Paycheck Paper check with stub Least secure payment method because the employee is responsible for handling the paycheck Direct Deposit Employers directly deposit employee’s paycheck into the authorized employee’s bank account Payroll Card A payroll card electronically carries the balance of the employee’s net income

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Paycheck Pros and Cons Touch and feel the payment Employee controls when it is deposited Least secure method Employee responsible to get it to the bank Fees may apply if a person is unbanked Pros Cons

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Direct Deposit Pros and Cons No direct handling of check Won’t get lost Employee knows exactly when money will be in account No direct handling of the check Must check online for accuracy of paycheck stub Pros Cons

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Payroll Card Pros and Cons No direct handling of check Wages automatically loaded on card Works like a debit card Card could be lost Fees may be charged Pros Cons

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Personal Information - Employee’s full name, address, and social security number or employee identification number Pay Period -The length of time for which an employee’s wages are calculated Most businesses pay employees either weekly, bi-weekly, or monthly

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Reading a Paycheck Stub Personal Information: Name, SSN or Employee Number & Address Personal Information: Name, SSN or Employee Number & Address

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Reading a Paycheck Stub Pay Period: The length of time for which an employee earns wages Pay Period: The length of time for which an employee earns wages

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Reading a Paycheck Stub Gross Income: The total amount of money earned before payroll withholdings Gross Income: The total amount of money earned before payroll withholdings

1.3.4.G1 If a person earns an hourly wage, gross income is calculated by multiplying the number of hours worked by the wage Number of hours worked Wage Gross Income What is the gross income if an employee works 15 hours at an hourly wage of $9.50? What is the gross income if an employee works 15 hours at an hourly wage of $9.50?

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Reading a Paycheck Stub Payroll Deductions: Items deducted from gross pay. Typically around 30%. Typically include: Federal withholding State withholding FICA Payroll Deductions: Items deducted from gross pay. Typically around 30%. Typically include: Federal withholding State withholding FICA

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Reading a Paycheck Stub Deductions this pay period Accumulated deductions for the year

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona – Withholding Tax – The amount required by law for employers to withhold from earned wages to pay taxes – FICA-Federal Insurance Contribution Act Fed OASDI/EE (Federal Old Age Survivors Disability Insurance Employee Employment Tax) or Social Security - helps provide retirement income for the elderly and pays disability benefits Fed MED/EE (Federal Medicare Employee Employment Tax) or Medicare - health care program for the elderly and disabled Payroll Deductions

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Reading a Paycheck Stub Net Income: The check amount that is often referred to as the take home pay. Net Income: The check amount that is often referred to as the take home pay.

1.3.4.G1 Often referred to as “take home” pay THE AMOUNT LEFT AFTER ALL PAYROLL DEDUCTIONS HAVE BEEN TAKEN FROM GROSS INCOME Net Income

1.3.4.G1 – Gross Income $ – Payroll Withholdings: Federal Withholding Tax $14.10 State Withholding Tax $5.45 FICA $13.77 What is her Net Income? $ – ($ $ $13.77) = $ Net Income Payroll Withholdings Net Income

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Review each pay period It is important to review each paycheck stub to identify any possible mistakes! – If a mistake is found, contact the employer immediately

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Salary vs. Hourly Salary Set amount of money Not dependent on the specific number of hours worked Example: $30,000/year Hourly wage Earn a specific rate for every hour worked Example: $16.00/hour Minimum wage – Federal and state Would you rather be paid a salary or hourly wage?

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona How often will I get paid? Weekly? 52 pay periods a year Bi-Weekly? 26 pay periods a year Bi-Monthly? 24 pay periods a year Monthly? 12 pay periods a year

© Take Charge Today –August 2014 – Planet Paycheck– Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 © Take Charge Today – November 2014 –Paycheck Basics– Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona G1 Questions?

1.3.4.G1 How do we pay them and why. What About Taxes?

1.3.4.G1 Required charges of citizens by local, state and federal governments Provide public goods and services. What are taxes? What are examples of goods and services that are paid for with taxes?

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona What are the five main types of taxes? Income Payroll Property Sales Excise Withheld from wages Paid at the time of purchase

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona What are the mandatory income and payroll tax deductions? Income Federal income tax State income tax Payroll Social Security Medicare

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona W-4 Must be completed To receive a paycheck, an employee must: Complete a Form W-4 Employee’s Withholding Allowance Certificate Determines the amount of money withheld for taxes

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 27 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona What forms of ID do you have to complete the I-9? What forms of ID do you have to complete the I-9? I-9 must be completed Completing a Form I-9 Used to prove citizenship Must provide at least 2 of the following – passport – driver’s license – U.S. military card – Social Security card – birth certificate

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 28 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona W-2 is completed at the end of the tax year Form W-2 (Wage and Tax Statement) States the amount of money earned and taxes paid throughout the previous year Used to file income taxes by April 15 th Individuals may be exempt from filing federal withholdings if they make less than a certain amount per year How many businesses in our community advertise to help with this process? How many businesses in our community advertise to help with this process?

1.3.4.G1 © Take Charge Today – November 2014 – Paycheck Basics – Slide 29 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona Can an employer pay employees in cash? If taxes are not deducted from your wages you: Are not managing your tax liability Will be responsible for tracking the amount of money made and paying those taxes Are probably not receiving worker’s compensation and unemployment insurance coverage Ensure employer is deducting income and payroll taxes from wages paid in cash Consult a tax professional to determine if you should pay taxes on cash earned.