W-4 Form Employee’s Withholding Allowance Certificate –Determines the amount of money your employer will deduct from your check for income taxes –Must declare allowances or persons claimed The more claimed—less taxes are taken from check
Social Security Your personal identification number –Be careful to whom you give it to As a tax –Both employee and employer contribute –The amount contributed throughout lifetime will be returned at retirement.
W-2 Form Wage and Tax Statement –S–S–S–Shows income earned during the year and all withheld amounts –E–E–E–Employer must provide copy to employee by January 31 –U–U–U–Used to figure income taxes
Social Security Act Enacted to provide federal aid for elderly and disabled. FICA = Social Security Tax FYI…. in 2010, 54 million people were receiving Social Security benefits, while 157 million people were paying into the fund; of those receiving benefits, 44 million were receiving retirement benefits and 10 million disability benefits
Unemployment Compensation Provides benefits to workers who lose their jobs though no fault of their own. Have to be actively looking for a job Can receive compensation for 26 consecutive weeks.
Fair Labor Standards Act Aka Wage and Hour Act 1938 Established minimum wage Federal Minimum wage – State Minimum wage - FYI…. In 1966, the minimum wage was $1.60.
Gross Pay Total or agreed upon rate of pay before deductions
Hourly Wages When employee is paid for every hour worked
Overtime Full time hourly workers cannot work over 40 hours a week without being paid overtime –Overtime rate is normally 1 1/2 times regular rate of pay
Monthly Salary Paid set amount per month Doesn’t matter how many hours worked No overtime paid unless agreed upon
Annual Pay Set pay for year divided into equal amounts Overtime usually not paid
Pay Periods Monthly – once a month –12 pay periods Biweekly – every two weeks –26 pay periods Semimonthly – two times a month –24 pay periods Weekly – every week –52 pay periods Which is best???
Deductions Subtracted from gross pay Examples of required deductions –Social security tax –Federal and state income tax Examples of optional deductions –Insurance--Retirement –Savings accounts--loan payments –Charity
Net Pay Also known as Take Home Pay Gross pay minus deductions
Employee Withholding Sheet Required by law that explanation of pay computations be provided with each paycheck. ie..check stub