1. What do you feel is the best part of beginning a new job?
There are many different answers
to this question:
Self satisfaction
Learning new skills
Change in routine
However, many people will believe it is the PAYCHECK received from that job!

2. Understanding Your Paycheck Essentials- Advanced Level
Family Economics & Financial Education
The Essentials to Take Charge of Your Finances
Understanding Your Paycheck Essentials- Advanced Level
Changes on slide 3, 18

3. 1. 2. Fill out employment forms
What does an employee have to do before receiving a paycheck from a new job? 1.
Fill out employment forms
Form W-4 and Form I-9 2.
Choose how to receive the paycheck (if options are available)

4. Form W-4 Employee’s Withholding Allowance Certificate
Determines the percentage of an employee’s pay that will be withheld for federal income taxes
What are taxes?
Taxes- Compulsory charges imposed on citizens by local, state, and federal governments

5. Provide public goods and services
Taxes
Provide public goods and services
What is an item or service that you use every day that is paid for by taxes?
Citizens pay many different types of taxes in many different ways
Income tax, sales tax, property tax
Largest amount of taxes is paid on income

6. Both Federal and State Income Tax
Income Taxes
Income Taxes
Employers are required to take income taxes directly out of an employee’s paycheck
Federal and State
Both Federal and State Income Tax
Form W-4
Lets an employer know how much of an employee’s paycheck to withhold to pay federal income taxes
Allowances
Amount withheld is determined by the number of allowances an employee claims on Form W-4

7. Allowances
Used to determine the amount of federal taxes withheld from the paycheck
A person may claim a personal allowance if no one else claims the person as a dependent
Dependent – a person who relies on the taxpayer for financial support
Number of allowances claimed on W-4
Amount of income
Amount of federal income tax withheld from paycheck

8. Form I-9 Employment Eligibility Verification Form
Verifies the eligibility of individuals to avoid hiring undocumented workers or others who are not eligible to work in the United States
Must provide documentation which establishes identity and employment eligibility
Driver’s License
Passport
Social Security card
Birth Certificate

9. What are methods employers can use to pay employees?
Will discuss the following methods:
Paper Paycheck
Direct Deposit
Payroll Card
An employer may offer only one or all of these payment options to their employees.

10. What is a Paper Paycheck?
Paper Paycheck – payment given with a paper check with a paycheck stub attached
Paycheck stub – lists important information about the paycheck and outlines the deductions made
Least secure
Employee is completely responsible for paycheck
Increased chance of the paycheck getting lost
The cost for employers to print paychecks is greater compared to direct deposit
Most common
Employee may choose what action to do with the paycheck
Deductions are clearly identified on the paycheck stub attached

11. What is Direct Deposit?
Direct Deposit - employers directly deposit employee’s paycheck into the authorized employee’s depository institution account
Employee receives a paycheck stub
Increased security and convenience for employee
Employee knows exactly when paycheck will be deposited
Employee can view their paycheck stub to see what deductions have been taken
Employees must use a depository institution for this method to be available

12. Payroll Card - payment electronically loaded onto a plastic card
What is a Payroll Card?
Payroll Card - payment electronically loaded onto a plastic card
Funds are automatically deducted from the balance of a payroll card when a purchase is made
Can be used for ATM withdrawals or to make purchases
Employee will receive some type of paycheck stub (may be electronic)
There can be numerous fees associated with payroll cards
Safer than carrying large amount of cash
Can review paycheck stub
Employees must be careful of fees charged by payroll cards

13. Which payment method would work best for you?
Receiving a Paycheck
Which payment method would work best for you?
Will receive payment after the next pay period
Pay period - the length of time for which an employee’s wages are calculated
Weekly
Bi-weekly
Twice a month
Monthly

14. Reading a Paycheck Stub
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
Why is it important to understand how to read a paycheck stub?

15. Personal Information
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
States the employee’s full name, address, and Social Security or Employee Identification number
Always check to ensure this information is correct

16. Pay Period
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
The last day of the pay period is not always payday to allow a business to accurately compute wages

17. Gross Income
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
The total amount of money earned during a pay period before deductions

18. Net Income
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
The amount of money left after all deductions have been withheld from the gross pay earned in the pay period

19. Payroll Withholdings
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
The amount of money subtracted or deducted from the gross pay earned
Mandatory deductions to pay taxes
Optional deductions to pay employee sponsored medical benefits, and/or retirement benefits

20. Federal Withholding Tax
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
The amount required by law for employers to withhold from earned wages to pay federal income taxes
Largest deduction withheld from an employee’s gross income

21. State Withholding Tax
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
The percentage deducted from an individual’s paycheck to assist in funding government agencies within the state (not all states have state income tax)
The percentage deducted depends on the amount of gross pay earned

22. FICA (Federal Insurance Contribution Act)
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
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

23. Social Security
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
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

24. Medicare
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
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

25. Retirement Plan Optional deduction
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
Optional deduction
The amount an employee contributes each pay period to a retirement plan
A specified percentage of the contribution is often matched by the employer

26. Medical Optional deduction
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
Optional deduction
The amount taken from the employee’s paycheck for employer-sponsored medical benefits

27. Year-to-Date
On-The-Go
Employee Beakens, Joe
Employee Identification
Check # 164
Check Amount $1,102.98
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Income
Payroll Withholdings
Current
Year-to-date
 $1,353.33
Federal 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
$1,502.10
Pay Period 6/11/2004-7/11/2004
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

28. Summary What is the process to obtain a paycheck?
Fill out employment forms
Form W-4
Determines Federal Income Tax withheld
Form I-9
Employment eligibility
Determine method to receive paycheck
Examine advantages and disadvantages of each method offered to determine best method for you
Receive paycheck
After next pay period
Check the paycheck stub
Make sure you have been paid the correct amount
What is the process to obtain a paycheck?