Paychecks Personal Finance

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Dependent care account

(DCA) childcare

How to calculate net pay

1) calculate gross pay 2) calculate pre tax deductions 3) gross minus pre taxes 4) calculate payroll taxes on adjusted income 5) deduct other things ex. gym membership

payroll deductions

1) fit-federal income tax 2) sit- state income tax 3) social security- 6.2% out of paycheck 4) medicare- 1.45% out of paycheck

How is gross pay calculated

1) hours times hourly wage 2) salary/# of pay periods

What percentage of gross income is deducted for medicare?

1.45%

monthly

12 paychecks

semimonthly (twice a month)

24 paychecks

biweekly

26 paychecks

Percentage of taxes taken from paychecks

31%

What percent of a person's paycheck is deducted

33%

regular hours in a work week

40

weekly

52 paychecks

FICA

Federal insurance contributions act: social security and medicare deductions

What does the W4 determine

Filled out and given to you by employers to determine the amount of taxes you pay. - You fill out how many allowances (tax breaks) you will have on this

Unearned income

Savings account, dividends from stocks, assets

Does employer match social security and medicare?

Yes

What is a dependent

a non-tax payer, someone that relies on taxpayer/person getting paycheck for financial support

How are federal taxes determined

by income + what you file on W4

What services are provided by the Internal Revenue Service

collect taxes, enforce tax laws

4 different types of taxes

income (taxes on income), x size ( ), property (if you own something), sales (on what you buy)

4 sources of income

investment, interest, employment, entrepreneurship

pay period

length of time for which an employees wages are calculated

What documentation must be provided to complete a form I-9

license, birth certificate, passport, military id

MRA

medical reimbursement account ex. contacts, sun tan lotion

Three methods employers use to pay employees

paycheck, direct deposit, payroll card

direct deposit pros and cons

pros- increased security, you know when paycheck will be deposited, employee can view paycheck stub to see deduction.

paycheck pros and cons

pros-employee may choose what to do with each paycheck, deductions are clearly identified on paycheck stub cons- least secure, might get lost, cost more for employers to print paychecks

payroll card pros and cons

pros-safer than carrying around cash, can review paycheck stubs cons-employees must be careful of fees charged by payroll cards

Earned income

regular salary, wages, commission, tips, bonuses, tax refunds

Who receives social security?

retirees, disabled, child under 18 who lost parents, window w/ kids

what do taxes provide citizens?

schools, public departments

what does social security fund

unemployment, retirement, disability insurance

allowances

used to determine amount of federal taxes withheld from the paycheck

What two forms must an employee complete when beginning a new job?

w4, I-9

Pay periods

weekly, bi-weekly, twice a month, monthly


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