G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Daily Information – 10/5 Objectives: 1. Describe employee benefits and their role in employee compensation. 2. Discuss the benefits of paying taxes. 3. List the required and optional deductions from gross pay. Warm Up: Continue working on the Introduction to Paychecks packet. This is an individual assignment. ***Unit 1, Lesson 4 Agenda: 1.Warm-up 2.Paycheck and taxes presentation 3.Group activity 4.Resume Project 5.Bottom Line

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Daily Information – 10/9 Objectives: 1. Describe employee benefits and their role in employee compensation. 2. List the required and optional deductions from gross pay. 3. Calculate deductions from pay to configure net pay amount. Warm Up: Log onto your computer and check your grade in Infinite Campus. Progress Reports for Marking Period 1 are due by Wednesday! **Send me your Career Exploration Projects if you have not already done so Agenda: 1.Warm-up 2.Paycheck and taxes presentation 3.Group activity 4.Individual activity 5.Bottom Line

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Paychecks and Taxes Take Charge of your Finances Family Economics & Financial Education

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Where Does My Money Go? Imagine you have just started your first job! After the first week, you have earned $100. About how much money would you receive in your first paycheck?? –A) $100 –B) $84 –C) $69 –D) $55

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Where Does My Money Go? Almost 31% of an individual’s paycheck is deducted. Your net paycheck would be only about $69! How do you get from $100 all the way down to $69???? Might be worth taking a look, right?

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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 – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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 On-The-Go Employee Beakens, Joe SSN 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 – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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 number –Always check to ensure this information is correct

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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 time period

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Taxes What are taxes? –Mandatory charges imposed on citizens by local, state, and federal governments. What are they used for? –To provide public goods and services –Largest amount of taxes a person pays is on his/her income. Internal Revenue Service (IRS) – Collects federal taxes, and enforces tax laws written by the United States Congress.

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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 (25%)

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Voluntary Deductions Voluntary Deductions – money withheld voluntarily by employee such as: Medical Insurance Retirement Plans – Saving Bonds, 401K & 403B Union Dues Dependent Care Accounts Disability Insurance

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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 –May be a 401K, a state, or local retirement plan

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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 –Medical benefits usually include medical insurance, prescription, dental, etc.

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck 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

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona What Are Employee Benefits? Slide 23 Benefits are forms of pay other than salary or wages. Pay without work (vacation, sick, personal days) Education Perks Insurance/HSAs Retirement plans (401k) Profit-sharing plans Stock option plans

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Group Activity In your base groups, answer the following questions in the textbook (Pages: 74 & 75): –1. Math (a,b,c,d) –2. Ethics –5. Math (a,b,c)

G1 © Family Economics & Financial Education – Revised March 2008 – Paychecks and Taxes Unit – Understanding Your Paycheck Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Individual Activity Complete “My Future Paycheck Stub” project. You may refer to your base group to check for understanding.