2 Types of PaySalary: set amount of money earned by an employee per year or fixed length of time.What are the advantages or disadvantages of a set salary?
3 Types of PayWages : employee earning that are paid by the hour, day or item.Piecework: wages based on the number of items or pieces produced.Commission: a fixed percent or amount given to employees In exchange for making a sale.
4 Types of Pay Some employees earn a commission plus a salary Others work of straight commission.What are the advantages or disadvantages?Tips: money earned in exchange for a service
5 Equal Pay Fair Labor Standards Act Includes equal pay provisions that forbids employers from paying one person less for the same work.
6 Equal PayMinimum wage: the lowest hourly rate an employer may legally pay most workers.Are Federal and State different in Illinois?Should the minimum wage be raised? Does a city have a right to tell a company how much you should pay employees?
7 Equal PayOvertime: in excess of 40 hours per week overtime is usually paid at the rate of 1.5 times the employees regular rateOvertime may be paid for anything over 8 hoursSalaried employees may be exempt
8 Types of BenefitsInsurance benefits: health care plans which may be paid for or available at a reduced costHealth care is coverage for employees is seen as a problem for some employers. Why?
9 Types of BenefitsSavings and retirement plans: taxable or pre-taxed savings plans, retirement plans, employer contribution or matching plansVested: allows an employee to be entitled to part of or all of their money in a retirement plan. Ex: vested 20% per year
10 Types of BenefitsOther benefits: paid holidays, vacation, or sick time
11 Employment Classifications Full-time: works hour of at least 35 hours per week. Usually can take part in employee sponsored benefit plans.Part-time: employees who work less than 35 hours per week
12 Employment Classifications Temporary: employees hired to fill short term assignments or additional work. Employees are usually paid by the temp agency and not the businessContract: employees hired for a specified period of time to complete a project. Paid by the company. May or may not have benefits
13 Employment Classifications Advantages of using temp or contract employees are:1. change staff as needs change2. May cost less in benefits, and training3. Can be used as a trial period before hiring for permanent position
14 Your PaycheckMany companies pay every week, every two weeks or even twice a month. Some useDirect deposit: an electronic transfer of funds directly into your accountEmployees will receive a pay stub providing all payroll information
15 Your PaycheckPay stub provides useful information and helps keep track of your earnings.Look at page 197Why should you go over your pay stub carefully each time you are paid?
16 Your PaycheckGross pay: is the total amount of money earned for working a pay period before deductions.Deduction: anything that is subtracted from gross pay. Can include taxes, benefits, or retirement with holdings
17 Your PaycheckTax withholdings: can include federal, state, or local taxes. It may also includeSocial security: a federal assistance program that pays retirement, survivor, and disability benefitsMedicare: federal program that helps pay medical expense for those who qualify
18 Your PaycheckSocial security and Medicare deductions sometimes use the abbreviationFICA-Federal Insurance Contributions ActIf you remember what FICA means you will be only one of a few to know
19 Your PaycheckNet pay: the amount of pay an employee is left with after taxes and other deductions are subtracted from the gross payAlso known as “take home pay”
20 Income Tax Income tax responsibility according to the IRS 1. Complete a W-4 form that allows an employer to withhold income tax from your pay.2. File a tax return at least once a year, and pay any additional tax owed
21 Income TaxW-4 Form-provides employer with your personal information, exempt status, and allowances Page 201Exempt status-do not have to pay taxes if you expect to make too little income during the yearAllowances: factors that affect the amount of income tax withholding. The more withholding , the less tax.
22 Income TaxIRS-Internal Revenue Service: a governmental agency in charge of collecting taxes.Taxes must be file by April 15th of the following year.You will need the following items before you file
23 Income TaxW-2 Form: an employer sends you this form showing your total earnings, and total taxes deducted for the year1099-INT: a form showing your earned interest income for the year in a savings account.
24 Income TaxYou may also need IRS booklets and personal and financial records.Filing status: is based on whether you are married or single. It does affect the amount of taxes owed.Exemptions: tax laws allow some income to be excused from taxes based on the number of qualified exemptions
25 Income Tax Dependent: someone who is supported by a taxpayer’s income. Adjusted gross income: Income that has been subtracted from total (gross) incomeTax deduction: reduces the amount of income that is taxed
26 Income Tax Two ways to take tax deductions 1. Itemized deductions: amount actually spent on tax-deductible expenses Ex: Charity, church, mortgage interestWhy would the government allow you to deduct the interest on your home loan?
27 Income Tax2. Standard deduction: set amount the IRS allows without listing expenses or having receiptsTaxable income: the portion of your income that is actually subject to taxTax credit: amount subtracted from taxes owed ex: education, child care
28 Electronic FilingConsider filing electronically through the IRS websiteYour money is usually returned much quicker