Personal Finance (Chapter 8)

Medicare Tax

1.45%

What is the overtime rate?

1.5

Part time

18%

Full-Time

25%

What is the popular voluntary deduction?

401K & 401B

Social Security Tax

6.2%

Salary

A fixed amount of money paid to an employee for each pay period regardless of the number of hours worked.

Hourly Wage

A specific amount of money paid "per hour" to an employee

Medicare

A tax required for people over the age of 65 that provides medical benefits.

What is a W-4?

An IRS form you have to complete to let your employer know how much money you withhold from your paycheck for federal taxes.

Allowance

An adjustment to the tax withheld from your paycheck.

Taxes should be filed every year by

April 15th

What is the first step in a payroll system?

Calculate the total earnings

What does an employer have to do, by law, with their gross earnings?

Deduct federal income, social security, and medicare tax.

The 3 typical payroll deductions include:

FICA (Federal Insurance Contributions), & State/Local taxes.

What is the special name of social security tax?

Federal Insurance Contribution

Where is federal income tax paid?

Federal government

The total amount of money that an employee has earned in a pay period is called:

Gross earnings

Allowances are based off:

Martial status & Number of dependents

What are the 3 benefits social security tax provides:

Retirees, disabled, & life insurance

Common voluntary deductions:

Union dues, charities, & pensions.

Deduction

Various amounts that are taken out from an employee's gross earnings.

Many states and cities tax the earnings of people who live or work within their cities is called what?

Boundaries

How to calculate overtime pay: How to calculate regular pay: How to calculate gross pay:

Overtime Hours Worked x Overtime Rate= Overtime Pay Regular Pay + Overtime Pay = Gross Pay Hours Worked x Hourly Rate = Regular Pay

What are the 3 methods of paying an employee?

Salary, Hourly, Wage, and Overtime Pay, Wage,+ Commission

After calculating gross earnings, what do employers use that is supplied by the IRS to determine the amount of federal taxes that'll be deducted by each employee?

Tax tables

FICA/OASDI

Taxes taken out for the elderly who turn 67, will be paid back monthly. (1,825 is the highest)

Commission

The amount of money paid to an employee based on a percentage of the employee's sale.

Federal income is based on what?

The amount of your income

What do employers use to keep track of time? (Hint: Another term for time clock)

Time card