Getting Paid

Pay period

A pay period is the regular schedule by which your employer will pay you. Pay periods are typically weekly, bi‐weekly or monthly and are usually determined by your employer. The last day of the pay period is not the actual day you will receive your paycheck. The pay date is delayed to allow the employer time to accurately compute your wages and pay you for all time worked in a pay period.

Payroll card

A payroll card is a reloadable debit card onto which a worker's pay is loaded. This is a good option if you don't have, can't get or don't want a traditional deposit account. When you make a purchase, funds are automatically deducted from the balance of your payroll card. You may pay fees when using a payroll card, or if you want to use the card to withdraw cash. The fees vary depending upon the depository institution, so it is important to obtain a list of all fees before using a payroll card.

Employee

A person who agrees to provide certain services at a job for an employer.

Dependent

A person who relies on you, the taxpayer for financial support.

Federal Income tax

A tax levied by the United States Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts and other legal entities. Employers are required by law to withhold a percentage of your wages to pay this tax.

Employment

An agreement between an employer and employee. Agreement can be verbal, implied, or written in an employment contract that both parties sign.

State Income tax

An income tax collected by most, but not all states (Florida, for instance, does not require it's residents to pay a state income tax). If you live in a state that has a state income tax your employer will deduct an amount from your wages. The amount deducted varies between states and depends on the amount of gross pay you have earned.

Employee information

As an employee, your full name, address, and employee identification number are standard information. Depending on the employer, this section may include additional information such as your job title, department, pay rate, etc.

Social Security

Employers are required by law to withhold a Social Security tax from your earned wages. Social Security is a federal government program that funds retirement accounts, financially supports citizens who have experienced profound disability, the premature death of a parent (if under the age of 18), or the premature death of a spouse in a family with children. You contribute 6.2% of your earned income to Social Security until you have reached your annual required contribuƟon amount that varies each year.

Medicare

Employers are required by law to withhold from your earned income this payroll tax contribuƟon to Medicare. Medicare is a federal program whose main purpose is to help pay for health care for those over 65. You contribute 1.45% of earned income to Medicare and there is no annual limit.

Employee Benefits

Employers may offer you employee benefits in the form of products or services that add extra value for employees beyond earned wages. You may pay a portion of the cost of the benefit. This additional payment deduction, taken from your gross income, is common with health care insurance, retirement plans, and flexible spending accounts. You typically pay much less by opting into these benefits and having their costs deducted from your paycheck than if you were to privately purchase the same product.

Employer

Someone who hires a person in exchange for compensation, usually in the form of wages or a salary.

Gross income

The amount of money earned before payroll taxes.

Net income

The amount of money you are left with once all deductions have been taken from your gross income.

Income tax

The tax you pay to federal, state and local governments on the amount of money you earn.

Paper paycheck

Your employer pays you by authorizing a check written to you in the amount of money earned. You are then able to access your wages by cashing your paycheck and/or depositing it in a depository institution account.

Direct deposit

Your wages are deposited directly into your depository institution account. This method is more secure than a paper paycheck because there is no direct check handling. Typically the employee receives a "receipt or paystub" on payday when this payment method is used.

Pay stub

"earnings statement"

Commission

A fee that a salesperson receives upon completion of a sale. It is a motivational system of paymentdesigned to encourage sales staff to sell more. If you accept a job as a car salesperson, a real estate professional, or a financial planner you most likely will earn a commission when a sale has been made.

Salary

A fixed amount of money or compensation paid to an employee by an employer in return for work performed. Salary is commonly paid in stages at fixed intervals, for example, monthly payments of one‐twelth of the annual salary. Salaries do not depend on the specific number of hours worked.

Payroll tax

withheld or paid on your behalf by your employer.