Working and Earning Earning Statements Key Ideas Employment provides a means of creating personal income Employee earning statements include information.

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Presentation transcript:

Working and Earning Earning Statements Key Ideas Employment provides a means of creating personal income Employee earning statements include information about………………. gross wages, benefits, taxes and other deductions

Overview Information Employees are able to monitor their salaries through the information provided on their earning statements provided each time an employee is paid (usually on a bi-weekly or monthly basis) includes information about hours worked, gross vs. net income, deductions, etc.

Gross vs. Net Income “gross” income is…….. the total amount of money an individual makes before deductions “net” income is……… the total amount of money that an employee actually gets after deductions Net income is also called… “Take Home Pay”

Gross is usually reflected in a general salary or hourly figure – Pete earns a salary of $45,000/year – Sarah earns $13.50/hour – Neither or these employees “takes home” that full amount

Deductions Define…. money that is taken out of an employees gross pay for different purposes Examples…… – health insurance (medical, dental, vision) – retirement contributions – annuities/loan payments – garnishment (for unpaid child support, owed back taxes, etc.) – taxes - federal, state and local Social Security, federal income, state income, local income

Example: Pete earns a salary of $45,000/year and gets paid every 2 weeks. Then, money is deducted for health insurance ($100/pay) 401k (10% of gross) Social Security (7% of gross) federal income tax (20% of gross) state income (4% of gross) local income taxes (2% of gross)

DeductionsDeduction AmountGross Income $45,000 Health Ins ($100 per pay) 401 k (10% of gross) Social Securtity (7% of gross) Fed.Income Tax (20% of gross) State Income Tax (4% of gross) Local Income Tax (2% of gross) Total Deductions

DeductionsDeduction AmountGross Income $45,000 Health Ins ($100 per pay)$2, k (10% of gross)$4,500 Social Securtity (7% of gross) $3,150 Fed.Income Tax (10% of gross) $4,500 State Income Tax (2% of gross) $900 Local Income Tax (1% of gross) $450 Total Deductions$15900 Net Income = $29,100 I HAVE NOT EATEN YET! = 64.6 % of Gross Income

Pay Check Deductions Federal Income Tax720 State Income Tax 220 City Income Tax 140 Medicare 50 STRS700 Health 120 Dental 6 Vision 1 Union B200 Savings $2292 Not taxed on this income earned