Calculating Net Pay Department of Education Office of the Commissioner Division of Human Resources Alscess Lewis-Brown, Director-Division of Human Resources Joy A. C. Williams, Assistant Director- STX Nicole Jacobs, Acting Assistant Director – STTJ By: Carmen M Miray Marcano Resource Specialist

Important Terms

School Calendar Year Refers to the 10 month school year beginning in late August and ending in early June. Calendar Year Refers to year beginning in January ending in December. Prorating To divide, distribute, or assess proportionately. Annual Salary Total of yearly gross payments. Gross Pay Total pay before deductions, reductions and taxes have been subtracted. Net Pay Take - home pay after reductions, taxes and deductions have been subtracted from your gross pay.

This presentation will based on a teacher’s Annual Salary. Formulas in this presentation hold true for all Annual Salaries.

Teacher’s Approximate Annual Salary Pay Scale BA + 5 yearsBA + 10 years Annual Salary$32,841.00$38,519.00

Your Annual Salary is Prorated As a teacher, your position requires your presence on planning days and on school calendar days, you will therefore work 190 days (10 months).

Prorated Salary When you are hired you are given an annual salary based on a complete contract year. A complete contract year for a teacher begins in August and ends in June; Annual salary however, is prorated into 26 pay periods covering the entire Calendar year.

Prorated Salary If you begin working after the beginning of the school year calendar, your salary will be prorated based on the number of days you will actually work. Your pay periods will be prorated to end at the end of the contract year (June).

Prorated Salary Formula for Salary prorating: a. Your annual salary is ___________. b. Your position is_______ days. c. Your daily rate of pay is _____ (A divided by B). d. You will work _____ days (based on your beginning date). e. You will earn _____(C multiplied by D). f. This will be divided equally by ___checks (number of pay periods remaining in the contract year). g. Your gross pay per pay period will be ___(E divided by F).

Estimated Prorating Formula for Salary prorating: a. Your annual salary is ___________. b. Your position is_______ days. c. Your daily rate of pay is _____ (A divided by B). d. You will work _____ days (based on your beginning date). e. You will earn _____(C multiplied by D). f. This will be divided equally by ___pay periods (number of checks remaining in the contract year). g. Your gross pay per pay period will be ___ (E divided by F). Estimated Prorating BA + 5 years a. Annual Salary : $32, b. 190 days c /190 =$ per day d. 114 (Estimated days beginning in January)* e. $ x 114 = $19,704.90* f. 13 pay periods remaining (beginning in January ending June) g. $19, / 13 = $1,515.76* (estimated gross pay ending June) *Estimate reflects special condition of mid school year employment.

Lump Sum Summer Prorated Payment If you are a teacher, who has worked from the beginning of the school year, and wish to have the remainder of your teachers’ annual salary awarded to you in a lump sum, you may request this in writing to the Payroll Office by May 15. It is important to note here that lump sum payments are taxed 28% and above in accordance Internal Revenue rules and regulations. In addition, fringe benefits are also deducted in a lump sum.

Calculating my net pay….

Gross Pay Gross pay is your total pay before deductions, reductions and taxes have been subtracted.

Net Pay Net pay is your take-home pay after reductions, taxes and deduction have been subtracted from your gross pay.

Formula for Deductions (Gross Pay) (% of deduction) = Amount of deduction Gross Pay – Total Amount of Deductions = Net Pay

Required Deductions Federal Tax Social Security Tax Retirement Plan

Federal Income Tax (Withholdings) Federal Income Tax Most types of US source income, even when received by a foreign person, are subject to US tax of twenty one (21%) to thirty percent (30%) depending on the gross salary of the employee.

Social Security Federal Income Tax Withholdings inherently include your Social Security Tax. This tax is a 7.65% of your yearly gross income. This contribution is mandatory through the “Federal Insurance Contribution Act” (FICA) and it is therefore irretrievable upon leaving the United States Employment System.

Federal Tax Withholding (21% - 30%) Social Security Tax (7.65%) Federal Income Tax (% will vary)

Deduction Sample (Gross Income) x (%) = Deduction (Social Security) $32, x.0765 = $2, (Internal Revenue) $32, x.1335 =$4, _________ Total Tax payment $6,840.61

Retirement Plan (Withholdings) 8% of Gross Salary deductions are automatic for anyone under the age of 55 coming into the USVI Government Employment System to the VI Retirement System.

Retirement Deduction Sample (Gross Income) x ( % Retirement) $32, x.08 = $2,627.28

Retirement Plan (Withholdings) If at any time the employee resigns the USVI Government Employee System, they may retire their investment with an increase of 4% on their total investment. Example: Total Investment x 4% increase $2, x.04 = $ Total Retrieved upon resignation: $2,732.37

Taxes and Retirement Withholdings Approximate Net Income Pay ScaleBA + 5 yearsBA + 10 years Annual Salary $32,841.00$38, Social Security (7.65%) $2,512.34$2, Internal Revenue (13.35%) $4,384.27$5, Retirement (8%) $2,627.28$3,082.52

Medical Insurance Withholding Medical insurance withholding will vary according to the employee’s need for coverage, dependents and choice of coverage options. All beneficiaries must be added during the open enrollment period, or within thirty days of birth or marriage. In all other cases changes will have to wait until the following registration period during the month of August.

Approximate Net Income Pay ScaleBA + 5 yearsBA + 10 years Annual Salary $32,841.00$38, Social Security (7.65%) $2,512.34$2, Internal Revenue (13.35%) $4,384.27$5, Retirement (8%) $2,627.28$3, Medical Insurance Withholding * Based on single coverage $1, Total Withholdings: $11,509.09$13, Net Pay $21,331.91$25,363.29

Authorized Deductions Charitable Contributions Payments to Fiscal Institutions Air Ambulance Service* AFT dues (Dues paid to the Federation of Teachers)* *Italicized represent common choices of authorized deductions.

Authorized Deductions Per Year Air Ambulance (estimate) $ AFT Dues$ Total Authorized Deductions: $ The above represent common choices of authorized deductions.

ApproximateNetIncome Pay ScaleBA + 5 yearsBA + 10 years Annual Salary $32,841.00$38, Social Security (7.65%) $2,512.34$2, Internal Revenue (13.35%) $4,384.27$5, Retirement (8%) $2,627.28$3, Medical Insurance * Based on single coverage $1, Total Withholdings: $11,509.09$13, Net Pay $21,331.91$25, Authorized Deductions $ Net Pay with Authorized Deductions $ 20,921.45$24, * All Values are estimated.

Estimated Net Pay with Authorized Deductions Net Pay with Authorized Deductions BA + 5 years $20, BA + 10 years $24, Estimated Monthly NP $1,743.45$2, Estimated Bi-weekly NP (26 pay periods) $804.67$959.72

Government Investment per Employee The Government of the USVI must pay the following for each employee: Annual Salary Social Security Payment FUTA (Federal Unemployment Tax) SUTA (State Unemployment Tax) Retirement Investment Medical Insurance

Government Investment per Employee Government as the Employer must pay: 7.65% of Gross payment in FICA (Social Security Tax); 6.2% of Federal Unemployment Tax (until the employee has collected $7,000) 5.4% of State Unemployment Tax (until the employee has collected $7,000) 14.5% of Gross payment as Retirement Investment 65% of the Total Yearly payment of Medical Coverage Chosen by employee

Formulas for Estimated Total Government Investment Gross Payment x.0765 = FICA (Social Security) Gross Payment x.145 = Retirement $7,000 x.062 = FUTA (Federal Unemployment Tax) $7,000 x.054 = SUTA (State Unemployment Tax) 65% of Medical Coverage selected by Employee

Estimated Government Investment per Gross Pay Pay Scale BA + 5 yearsBA + 10 years Annual Salary $ 32, $ 38, Social Security (7.65%) $ 2, $ 2, Retirement (14.5%) $ 4, $ 5, SUTA (State Unemployment Tax)(5.4%)* $ FUTA (Federal Unemployment Tax)(6.2%)* $ Medical Insurance* (65% of total cost) $ 3, Estimated Yearly Investment $ 44, $ 51, *Medical Insurance estimated for Single Coverage. *Paid while employee has made less than $7,000

Questions? Please contact: USVI Department of Education, Division of Human Resources

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