The truth about your paycheck Gross vs Net Pay

Taxes Withheld Federal Federal – Income tax 10 or 15% (details) details – Social Security 6.2% (up to $7,049.40) Maxes out when earning read $118,700 in 2015 Maxes out when earning read $118,700 in 2015 – Medicare 1.45% State 3.07% State 3.07% Local 1% Local 1% Taken once each year Taken once each year – County taxes – Emergency taxes

Non-tax deductions After-tax deductions. Taxes are deducted from the contribution amount. Taxes are deducted from the contribution amount. Union Dues Union Dues Unemployment.06% (up to $500) Unemployment.06% (up to $500) Disability (not in PA) Disability (not in PA) Purchase vacation time Purchase vacation time

Non-tax deductions Before-tax deductions. No federal and sometimes no state taxes are paid for the contribution amount No federal and sometimes no state taxes are paid for the contribution amount Flexible spending accounts Flexible spending accounts – Pay for medical expenses or childcare – Use it or lose it Health Insurance Contribution Health Insurance Contribution Savings Plans Savings Plans – 401(k) from for-profit businesses – 403(b) from non-profit businesses – 529 account for education – Matching funds

How do you figure it? You work 30 hours at $7.25/hour. You work 30 hours at $7.25/hour. You earn: $ You earn: $ Subtract Subtract – Federal tax: $ x 15% = – Social Sec: $ x 6.2% = – Medicare: $ x 1.45% = – State tax: $ x 3.07% = – Local taxes: $ x 1% =

How do you figure it? You work 40 hours at $15/hour. You work 40 hours at $15/hour. You earn: $600 You earn: $600 Subtract Subtract – Federal tax: $600 x 15% = – Social Sec: $600 x 6.2% = – Medicare: $600 x 1.45% = – State tax: $600 x 3.07% = – Local taxes: $600 x 1% =

Deductions Earnings $ Earnings $ Union Dues $20/week Union Dues $20/week Health Insurance $50/week Health Insurance $50/week So, starting with $600 a week, your actual take home, or net pay, after taxes but before savings, is $ That’s 62%. So, starting with $600 a week, your actual take home, or net pay, after taxes but before savings, is $ That’s 62%.

Playing with the Numbers Using Excel, we’re going to experiment with numbers and see how formulas can do the work for you. Using Excel, we’re going to experiment with numbers and see how formulas can do the work for you.Excel

Assignment Complete the Complete the Calculating Taxes and Net Pay assignment. Hand it in before you leave today.