Payrolls

Terms Deductions-Money taken from your paycheck for an income tax or other payment that you approve. Earnings-The money that you earn. Gross pay-The amount of pay you earn before deductions are taken out. Net pay-The amount of pay that you take home after all deductions are taken out.

FICA-(Federal Insurance Contributions Act)-Requires all workers to pay part of their income to the federal government for Social Security and Medicare. Dependent-Someone who relies on you for financial support, such as a child. Withholding Allowance-The number of dependents you claim on your W-4 form.

W-4 form-Completed by an employee to indicate his or her tax situation to the employer. State Income Tax-This tax helps pay for services provided by state government, such as roads, safety, and health. Federal Income Tax-This tax helps pay for services provided by the federal government, such as defense, human services, and the monitoring and regulation of trade. Social Security-Taxes that help pay for retirement costs. Medicare-Taxes that help pay for health care costs for individuals over 65 and those with a disability.

Life Insurance-Deductions go towards a life insurance policy. Long-Term Disability Insurance-This insurance helps replace some of your income for an extended period when you cannot work at all or can only work part-time because of an disability.

Dental Insurance-Pays a portion of the costs of dental care. 401K-Established by employers to which eligible employees may make salary deduction contributions on a post-tax and/or pretax basis. YTD-(Year to Date)-Refers to the period extending from the beginning of the year to the present.

Required Taxes Federal Income Tax State Income Tax Local Income Tax FICA Social Security Tax FICA Medicare Tax

In addition to required deductions, employers may take money directly out of employee’s paychecks to pay for various employee benefits such as: life insurance disability insurance medical insurance dental insurance retirement

What is a Pay Stub? A pay stub is a piece of paper that shows your earnings and deductions on a paycheck.

Example of a Pay Stub

Example of a Pay Stub

Complete the Pay Stubs assignment.

Getting Paid Some employers pay a set amount for every hour an employee works. This is called regular pay. When an employee works over 40 hours within a pay period they earn overtime.

Formulas for Calculating Earnings Hours Worked x Hourly Rate=Regular Pay Overtime Hours Worked x Overtime Rate=Overtime Pay Regular Pay + Overtime Pay=Gross Pay

Practice Amy works at Fashion Closet. She worked 37 hours this week. If her regular pay is $9.50 per hour, what is Amy’s gross pay?

Practice Thomas works for a lawn care company. He worked 40 hours this week. If his regular pay is $15.00 per hour, what is his gross pay?

Practice Sue works as a receptionist for a doctor’s office. She worked 45 hours this week. If her regular pay is $10.50 per hour… What is her regular pay? What is her overtime pay? What is her gross pay?

Practice Bill works for a roofing company. He worked 48 hours this week. If his regular pay is $15.50 per hour…. What is his regular pay? What is his overtime pay? What is his gross pay?

Practice Sam is a truck driver. He gets paid $14.50 per hour. He worked the following hours this week: Monday: 9 Tuesday:9.5 Wednesday: 8.75 Thursday: 9.25 Friday:8 How many hours did Sam work? What is his gross pay?

Practice Penny works at a bank. She gets paid $15.50 per hour. She worked the following hours this week: Monday:10 Tuesday:9.5 Wednesday:7.25 Thursday:9.25 Friday:9 How many hours did Penny work? What is her gross pay?

Salary Pay A salary is a set amount of pay an employee will earn per year regardless of the number of hours they work. Formula: Annual Salary/Total Number of Pay Periods in the Year=Amount of Salary for each Pay Period

Practice Billy works at a local bank. His annual salary is $45,500. If he receives a paycheck every two weeks, what is his biweekly salary?

Practice Brian works for an attorney. His biweekly salary is $2,567.00. What is his annual salary?

Practice Gracie is a florist. Her annual salary is $45,378. She receives a paycheck once a month. What is her monthly salary?

Practice Karen’s annual salary is $34,350.00. If she gets paid weekly, how much does she get paid each week?

What is Sales Commission? Sales commission is the amount of money that you make based on your sales.

Salary Plus Commission Example: Jenny earns a salary of $420 per week plus 5% commission on sales. What is Jenny’s weekly gross salary if her total sales were $3,920? $3,920 x .05=$196 (total sales times commission rate) $196 + $420=$616 (amount earned in commissions + weekly gross salary)

Salary Plus Commission Example: Larry earns $9.50/h plus 7% commission on sales. This week Larry worked 38 hours. What is Larry’s weekly gross salary if his total sales were $3,567? $3,567 x .07=$249.69 (total sales x commission rate) $9.50 x 38=$361.00 (pay for hour x # of hours worked) $249.69 + 361.00=$610.69 (amount earned from commissions + weekly gross pay)

Practice Jack earns a salary of $500 per week plus 8% commission on sales. What is Jack’s weekly gross salary if his total sales are $4,500?

Practice Carrie earns a salary of $320 per week plus 7% commission on sales. What is Carrie’s weekly gross salary if her total sales are $6,234?

Practice Brittany earns $12.50/h plus 8% commission on sales. Last week Brittany worked 37 hours. What was her weekly gross salary if her total sales were $4,350?

Practice Tim earns $15.20/h plus 7% commission on sales. This week Tim worked 40 hours. What is his weekly gross salary if his total sales are $5,206?

Straight Commission This is when the amount of money that a person earns is strictly from commission on their sales.

Straight Commission Example Jerry sells house alarm systems. He earns straight commission. Last week his total sales were $3,552.98. If he earns 5% rate of commission, what was his gross income last week? $3,552.98 x .05=$177.65 (total sales x commission rate)

Straight Commission Example Jalen earns straight commission. Last month his total sales were $90,938.65. His commission rate is 3%. What was his gross monthly income last month?

Practice Brice earns straight commission. Last week his total sales were $65,450. He earns 6% rate of commission. What was his weekly gross income?

Practice Kalea earns straight commission. Last month her total sales were $925,965. She earns a 5% rate of commission. What was her gross income last month?

Piece Work Pay For this type of pay, workers are paid a set amount for each piece they produce, box, or deliver instead of being paid by the hour.

Piece Work Example Chris gets paid $0.50 for every pair of socks he makes. If he made 10,450 socks in one month, what is his gross monthly pay? $0.50 x 10,450=$5,225 (Rate per Piece x # of Pieces Produced)

Example Jeremy packs t-shirts into boxes. He gets paid $0.42 for every box he packs Monday through Saturday and $0.52 for every box he packs on Sunday. He packed the following boxes this week: Monday: 125 Tuesday: 178 Wednesday: 200 Thursday: 170 Friday: 200 Sunday: 130 What is Jeremy’s gross pay for the week? Number of boxes packed Monday-Friday=873 873 x .42=$366.66 (# of boxes packed Mon.-Fri. x Rate per Piece) 130 x .52=$67.60 (# of boxes packed on Sunday x Rate per Piece) $366.66 + $67.60=$434.26 (total earned Mon.-Fri. + total earned on Sun.)

Practice Madison is paid $.80 for every scarf she makes. If she made 2,500 scarfs last week, what is her weekly gross income?

Practice Hazel gets paid $2.50 for every canvas she paints and sells. If she painted and sold 3,450 paintings last month, what is her monthly gross income?

Practice Blake gets paid $0.65 for every chair he makes Monday through Friday and $0.80 for every chair he makes on Sunday. He made the following number of chairs last week: Monday: 10 Tuesday:20 Wednesday: 16 Thursday: 15 Sunday: 12 How many chairs did he make? What is his weekly gross income?

State Taxes Most states use a progressive tax and some have a flat-rate tax or flat tax. Flat tax means that all employees pay the same percentage rate regardless of their total income amount. -States with a flat income tax usually tax income rates between 3 and 5 percent. Progressive tax means that the tax amount is based on the amount of income. State income tax=gross pay x tax rate

W-4 Form (Withholding Allowance Certificate) Withholding Allowances are the number of dependents claimed by the employee. The fewer the allowances/dependents claimed the more taxes that will be deducted. The more allowances/dependents claimed the less taxes will be deducted. Consider completing a new form when your personal and financial situations change.

Practice