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Income & Tax Forms
52
Income & Tax Forms
Employee
Income
Types of
Employee Income
Wage
Employee gets paid hourly, daily, or weekly
Wage
Ex. You make $10 an hour
Equation
Hours worked * Hourly pay rate = Wage
Equation
Pay Example
You make $11.25 an hour
You receive a paycheck every two weeks
Pay Example
Week #1 you worked 10 hours
Week #2 you worked 7 hours
How much money have you made?
Answer
Week #1:
$11.25 * 10 hours = $112.50
Answer
Week #2:
$11.25 * 7 hours = $78.75
$112.50 + $78.75
= $191.25
Minimum Wage
New Jersey minimum wage = ????
Lowest hourly wage employers can pay workers by law
Minimum Wage
Varies from state to state
What is the minimum wage in other states?
U.S. Map
Research the current minimum wage for each state!
Why?
Why is each state so different?
PBS Video Example
Some people just get by off of minimum wage
Cost of living differs from place to place
Reason we have it = make sure people are paid fairly
Arguments to raise it in NJ
(Good, bad, why?)
Salaried
Employees are paid a fixed yearly amount
52 weeks per year
Pay Periods
Usually get paid every 2 weeks
Example
You get paid $52,000 per year
Example
Your salary is $40,000 a year
You recieve a paycheck every 2 weeks
Example
There are 52 weeks in a year
How much money do you get from your salary on each pay check?
Answer
52 weeks / 2 = 26 weeks
Answer
$40,000 / 26 weeks
= $1,538.46 each pay check
What is your dream job?
What is the average salary for that job?
Dream Job
How much would you be paid every 2 weeks?
Commission
Employee makes money based off of how well they perform or the targets they meet
Commission
Better and more work = higher pay
Used as an incentive for employees to work harder
Example
You are a T.V. salesman for an electronic store
Don't make sales = don't make money
Example
You make $30 in commission for every T.V. you sell
Commission + Salary
Can have a base salary and earn commission on top
Commission + Salary
Can be more stable than just commission
Example
TV salesman makes a $15,000 salary
Example
He makes an extra $15 for each TV he sells
The average employee works 40 hours a week
Overtime
Over time
Overtime = working over 40 hours a week
Not all employees get overtime
Usually get paid 1.5 times their hourly wage
Gross Pay
What is Gross pay?
Definition
Money received from performing work or a service, prior to deductions.
Example
Example
Pay before deductions = $450.00
net pay
What is net pay?
Definition
Definition
Money recieved after taxes and deductions have been withheld
Gross pay - deductions
= net pay
Example
Pay after
deductions = $418.00
Example
Take home
This is the pay you actually take home!
Deductions
DEDUCTIONS
Deductions
Amount withheld from an employee's paycheck by their employer
What are they?
Ex. Taxes
Definition
Deduction
Examples
Mandatory Deductions
Voluntary Deductions
Employee 401k
Federal income tax
State income tax
Health insurance premium
FICA Tax: social secuirty and medicare
Examples
Deduction
Examples
Mandatory Deductions
Voluntary Deductions
Employee 401k
Federal income tax
State income tax
Health insurance premium
FICA Tax: social secuirty and medicare
Paycheck
stubs
What is a paycheck stub?
Definition
Document detailing an employee's gross pay, deductions, and net pay
Definition
Example
Example
Example
Always Check
Always check your paycheck stubs for accuracy!
w-4 forms
W-4 Forms
What are they???
Forms YOU fill out when starting a job
What are they???
Employers use these to figure out how much money to take out of your paycheck for taxes
Amount Taken out Effected By...
Marital status
Effects
Amount earned
# of allowances claimed
Allowances
Amount of earnings not subject to income tax
W4 - Form Example
Example
Example
Example
W-2 Forms
W-2 Forms
W-2 Forms
Completed by EMPLOYERS & given to employees
Show earnings & tax deductions withheld during the year
W-2 Forms
Sent each January to employees
Needed when filing your yearly taxes