G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 1 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Pg. 311 Reviewing the Facts 1-5. Turn and take a worksheet from the front table and answer the “Agree or Disagree” questions on the first section.

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Understanding Your Paycheck

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona First Job! You have just received your first paycheck from your new job! –But, the paycheck amount seems a little lower than you had figured. How could that be?

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Taxes Required charges of citizens by local, state, and federal governments –Taxes are deducted from all employees paychecks – Used to provide public goods and services Roads, police, schools, governmental agencies, fire and emergency services

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Starting a New Job 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

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Starting a New Job Complete a Form I-9 Used to prove the identity of people and avoid hiring non United States citizens Must provide at least 2 of the following –passport –driver’s license –U.S. military card –Social Security card –birth certificate

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Starting A New Job 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

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Methods for Paying Employees 1.Paycheck Paper check with stub Least secure payment method because the employee is responsible for handling the paycheck 2. Direct Deposit Employers directly deposit employee’s paycheck into the authorized employee’s bank account 3.Payroll Card A payroll card electronically carries the balance of the employee’s net income

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Payment Method Pros and Cons Paycheck –Pros: Employee controls when the check is deposited –Cons: Least secure, employee responsible for getting it to the bank Direct Deposit –Pros: No direct handling of check Employee knows exactly when he/she will be paid Payroll card –Pros: Wages automatically loaded onto a card –Cons May charge fees for use of the card

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Reading a Paycheck Family Economics & Financial Education

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Paycheck Stub –A document included each pay period which outlines paycheck deductions On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Personal Information –States the employee’s full name, address, and Social Security or Employee Identification number –Always check to ensure this information is correct On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Pay Period –The length of time for which an employee’s wages are calculated; most are weekly, bi- weekly, twice a month, or monthly –The last day of the pay period is not always payday to allow a business to accurately compute wages On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Gross Pay –The total amount of money earned during a pay period before deductions This is calculated by multiplying the number of hours worked by the hourly rate If a person is on salary, it is the total salary amount divided by the specified number of pay periods On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Net Pay –The amount of money left after all deductions have been withheld from the gross pay earned in the pay period On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Deductions –The amount of money subtracted from the gross pay earned for mandatory systematic taxes, employee sponsored medical benefits, and/or retirement benefits On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Federal Withholding Tax –The amount required by law for employers to withhold from earned wages to pay taxes –The amount of money deducted depends on the amount earned and information provided on the Form W-4 –Largest deduction withheld from an employee’s gross income On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona State Withholding Tax –The percentage deducted from an individual’s paycheck to assist in funding government agencies within the state –The percentage deducted depends on the amount of gross pay earned On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona FICA (Federal Insurance Contribution Act) FICA –This tax includes two separate taxes: Fed OASDI/EE or Social Security and Fed MED/EE or Medicare –These two taxes can be combined as one line item or itemized separately on a paycheck stub On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Social Security –Nation’s retirement program, helps provide retirement income for elderly and pays disability benefits –Based upon a percentage (6.2%) of gross income, employer matches the contribution made by the employee On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Medicare –Nation’s health care program for the elderly and disabled, provides hospital and medical insurance to those who qualify –Based upon a percentage (1.45%) of gross income On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 22 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Medical –The amount taken from the employee’s paycheck for medical benefits –Occurs when the employer has a medical plan for employees but does not pay full coverage for his/her benefits On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 23 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Retirement Plan –The amount an employee contributes each pay period to a retirement plan –A specified percentage of the contribution is often matched by the employer –May be a 401K, a state, or local retirement plan On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Year-to-Date Total of all of the deductions which have been withheld from an individual’s paycheck from January 1 to the last day of the pay period indicated on the paycheck stub On-The-Go Employee Beakens, Joe Employee Identification Check # 164 Check Amount $1, Employee Address 293 Michael Grove Billings, MT Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $ $40.82 $83.91 $19.62 $0.00 $0.00 $ $ $ $ $0.00 $0.00 Totals $250.35$1, Pay Period 6/11/2004-7/11/2004

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Miss Patty Paycheck’s Paycheck Stub Miss Patty Paycheck’s paycheck includes: –Gross Income $ –Payroll Withholdings: Federal Withholding Tax $14.10 State Withholding Tax $5.45 FICA $13.77 What is her Net Income? Gross Income– Payroll Withholdings = Net Income $ – ($ $ $13.77) = $146.68

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Reading A Paycheck Stub Year-to-Date- Totals all of the deductions which have been withheld from an individual’s paycheck from January 1 to the last day of the pay period indicated on the paycheck stub

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 27 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Remember to Review It is important to review each paycheck stub to identify any possible mistakes! –If a mistake is found, contact the employer for clarification

G1 © Family Economics & Financial Education – February 2006– Get Ready to Take Charge of Your Finances – Planet Paycheck – Slide 28 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona