Unit 2 Lesson 2 Notes 1 Paystubs Where is my money?

Unit 2 Lesson 2 Notes 1Paystubs

Where is my money?

What will you learn today?

• To identify the various sections of a paycheck stub.

• To calculate net pay.

• To identify possible job related expenses.

Let’s Review

• Pay Period -The length of time for which an employee’s wages are calculated

• Overtime - The amount of time a person works beyond 40 hours in a work week

• Overtime Pay - Pay for work beyond 40 hours in a work week that is at least one and one-half times the regular rate of pay.

• gross pay - The amount of money earned during the pay period before deductions

Let’s ReviewDo you remember the formula for calculating gross pay?

Gross Pay=Hours worked X Wage

John works at Burger King and his hourly wage is $8.50. Last week he worked 30 hours. What is John’s Gross Pay?

Hours worked (30) Hourly wage ($8.50) ×

Let’s multiply! 30 × $8.50 = $255.00

Paycheck

• All employees earn an hourly or piece rate wage.

• Most employers pay employees with a paycheck.

Paycheck-A form of payment to an employee

Key Word

Earnings Statement

• Paychecks come attached to an earnings statement.

• The earnings statement is your record of what you are being paid and the deductions being taken from your gross pay for that pay period.

• You should check your earnings statement each pay period for accuracy regarding the number of hours you worked and deductions.

Earnings statement- the “paycheck stub” listing gross pay and deductions

Key Word

Earnings Statement(Pay Stub)

• There are 3 general sections to an earnings statement (pay stub).– Earnings Section– Withholdings and Deductions Section– Personal Information Section

Earnings

① ② ③ ④ ⑤ ⑥ ⑦ ❶

Withholdings and Deductions

❷

Personal Information

❸

Deductions

Deductions-Money subtracted from gross pay for required taxes, employee insurance, and retirement benefits

Key Word

Federal income tax - The amount required by law for employers to withhold from earned wages to pay federal income taxes

Federal Income Tax

Key Word

Deductions-Federal Income TaxesYou Try

During this pay period, how much did Temika pay in federal taxes?

State Income Tax

State Income Tax-The percentage based on income deducted from a person’s paycheck by the state government to pay for government provided services such as roads, public schools and parks.

Key Word

Deductions-State TaxesYou Try

During this pay period, how much did Temika pays in state taxes?

FICA

FICA- Federal Insurance Contributions Act (FICA) FICA is a federal tax that funds Social Security and Medicare. Social Security and Medicare are income and insurance programs that help older Americans. Total FICA deducted from a person’s gross pay each pay period is 7.65%.

Key Word

Deductions-Federal Programs (FICA) You Try

During this pay period, how much did Temika pay in FICA?

Job Related Expenses-expenses deducted from a paycheck that are necessary to perform the job (e.g. specialized equipment, uniforms)

Key Word

Job Related Expenses

Deductions-Work Related ExpensesYou Try

What are two work related expenses listed on this pay-stub?

Net Pay

Net Pay-The amount of money left after all the deductions have been taken from the gross pay earned in the pay period. This is also known as take-home pay.

Key Word

Net Pay -You Try

During this pay period, what was Temika’s net pay?

Salary

Salary-the amount of money an employer pays an employee for work performed based on their hourly wage.

Key Word

Salary- You Try

If Temika was completing an application that asked her what her weekly salary was, what amount would she list?

Calculating Net Pay• Step 1: Find the total of all the deductions

taken from your paycheck. You do this by adding each deduction.

• Step 2: Subtract the total deductions from your gross pay.

Calculating Net Pay

• Step 2: Subtract the total deductions from your gross pay.

$24.92$53.40

$20.00

$27.23

$ 5.00+$130.55

−

• Step 1: Find the total of all the deductions taken from your paycheck.

$356.00

$130.55

$225.45

Gross PayDeductions

Net Pay

Example 1Scenario: Grady had his 90 day evaluation last week. He was told because of his excellent work ethic; he would receive a 25 cents pay rate increase per hour. Today is payday and Grady can’t wait to see how his raise will affect his paycheck. Let’s help Grady figure out his “net” pay

Step 1: Add deductions. Step 2: Subtract deductions

from gross pay.$55.11 + $25.72 + $28.11 + $20.00 + $5.00=

=$133.94

$367.38$133.94

$233.44

You Try• Scenario: Molly tracked the hours she worked during this pay period.

She worked 37 hours. Her current wage is $9.00 per hour. When she picked up her paycheck she was surprised. It was not what she was expecting. She decided to double check her “pay-stub” to make sure her paycheck was correct. Oh no, Molly forgot about deductions. Please help Molly find her net pay.

Step 1: Sum of deductions.______________

Step 2: Remaining salary. _______________$209.47

$123.74

In summary,

• We learned the three sections of a pay-stub are __________ , ___________, and _________ ___________.

• We learned to calculate the net pay by

__________the total deductions from the ________ pay.

deductions

personal information

earnings

subtracting gross

Review

• Step 1: Add all of the deductions________

• Step 2: Subtract the deductions from the gross pay. _________

$450.35

$67.55

$31.53

$33.78

$20.00

$152.86

$152.86

+

-$297.49$297.49

$152.86

Gross Pay

Deductions

Net Pay

Scenario: Brad’s gross pay is $450.35. He has several deductions taken from his gross pay. They are: Federal Income Tax -$67.55, State Income Tax-$31.53, FICA-$33.78 , Dental Insurance-$20.00. Let’s help Brad figure out his net pay.