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Reading a Paycheck Stub
Transcript of Reading a Paycheck Stub
if it's smaller than expected it can be a concern. Handout/Discussion
Sources of Income Web Paycheck With Pay Stub Employee can immediately see deductions taken out
Most common method used
Employee responsible for taking the check to the depository institution Direct Deposit Employer deposits the employee’s paycheck directly into the authorized depository institution
Employee receives a written statement detailing the paycheck deductions
More secure Payroll Card Prepaid card offers employees an alternative to paper paychecks or direct deposit
Most payroll cards are smart cards-money electronically loaded onto them each payday with funds automatically deducted from the balance when a purchase is made
Funds are directly deposited into dipository institution Three parties involved with the payroll card- employer, employee, depository institution
There are many fees associated with payroll cards Monthly or annual fee
Fee after specific number of transactions
Point of sale fee Benefits
Lower internal costs, producing, distributing, and handling
Safety, reduce the need to carry large amounts of cash
24 hour access
Unbanked employees, no check cashing fees Understand vocabulary Pay Period
Employers pay their employees on a regular schedule
Twice a month 1st and 15th
Monthly Handout reading In most businesses, the last day of the pay period is not payday
Payday is delayed a week or a full pay period to allow the business to accurately compute the employee’s wages and pay them for all the tie they worked in a pay period Taxes Taxes are a compulsory charge imposed on citizens by local, state and federal governments
These moneys are used to provide public goods and services
State withholding tax is a percentage deducted from paycheck
The largest amount is Federal tax withholding
IRS W4 Form Employee's withholding allowance certificate
Information determines the percentage withheld from gross pay
Every new employee will complete a form when they begin a new job Completing a Form W-4 Print legal name
Social Security Number
Sign and Date Form I-90 Employee Verification Form
Avoid hiring undocumented workers
Everyone has to complete this form
Provide documentation Reading A Paycheck Stub Personal Information - The employee’s full name, address, and social security number or the employee identification number Pay Period – The length of time for which an employee’s wages are calculated. Most are weekly, bi-weekly. Twice a month or monthly. Gross Pay – The total amount of money earned during the pay period before deductions. If a person earns and hourly wage, the gross pay is calculated by multiplying the number of hours by the wage.
Example: work 45 hours at $6.25 per hour = gross pay of $281.25 If a person is on salary, earning a set amount for a specific time period, the gross pay is the salary amount divided by the specific time period.
Example: Earn $24,000.00 per year and gets paid once a month the gross pay would be $2,000.00 per month Net Pay – The amount of money left over after all deductions have been taken from the gross pay earned in a pay period Deductions – The amount of money subtracted or deducted from the gross pay for mandatory systematic taxes, employee sponsored medical benefits and/or retirement benefits Federal Withholding Tax – The amount required by law for employers to withhold from wages to pay taxes. This represents the largest deduction taken from an employee’s gross income. The amount withheld depends on two things: the amount earned and the information provided on the Form W-4 State Withholding Tax – The percentage deducted from an individual’s paycheck to assist funding government agencies within the state. The percentage depends on the amount of gross pay the employee earned. FICA (Federal Insurance Contribution Act) – This tax includes two separate taxes: FED OASDI/EE or Social Security 6.2% and FED MED/EE or Medicare 1.45%. These two taxes may be combined as one line item or itemized separately on the paycheck stub. Social Security Tax – The nation’s retirement program. This tax help provide retirement income for elderly and pays disability benefits. Social Security Taxes are based on a percentage (6.2%) of the employee’s gross income. The employer matches the contribution made by the employee. Medicare – The nation’s health care program for the elderly and the disabled. This tax provides hospitals and medical insurance to those who qualify. Medicare taxes are based on a percentage (1.45%) of the employee’s gross income. Retirement Plan – The amount an employee contributes each pay period to a retirement plan. A specified percentage of the contribution is often matched by the employer. This may be a 401K, state or local retirement plan. Medical – The amount taken from the employee’s paycheck for medical benefits. This occurs when the employer has a medical plan for employees, but does not pay the full coverage for his/her benefits. Year-to-Date – Totals all of the deductions which have been withheld from an individual’s paycheck from January 1 to the last day of the pay period indicated on the paycheck stub. Try It! Employee Benefits The benefits offered and paid in part by employers Vacation
Maternity Leave Trish and Scotts Big Adventure