Welcome! Paychecks Money Taxes Workshop designed with you in mind! Ann Marie Erie Accounting Services Unlimited

What paychecks are all about! Paychecks are an account of your pay period and corresponding earnings. 2080 = Hours in “Full Time” work year Common Pay Periods: Weekly: Paid every Friday Bi-Weekly: Paid every 2 weeks on Friday. Can mean 3 paychecks in 1 month Bi-Monthly: Paid 1st and 15th of the month. Paychecks may be smaller than others depending on short months.

Pay period delay Most companies have at least 1 week delay between the pay period and the time the paycheck issued Management must verify hours worked AFTER employees have finished the pay period Time to process through payroll Transaction process time for cutting checks and direct deposit

Payday! Direct Deposit Pay Check Cash Secure & Safe Money transferred DIRECTLY to your account on payday Already in account when credit union opens! Pay stub is electronic or paper Pay Check Must manually deposit or cash check Fees usually associated with check cashing Cash No record for calculating benefits (SS) No “paper trail” for verifying income for loans

Employment “Exempt” “Non-Exempt” Not under DOL regulation for overtime Actually refers to definition of certain class of workers Certain professions / level of responsibility Not usually hourly workers “Non-Exempt” Federal Fair Labor Standards Act: must be paid for each hour of overtime worked

Your Paycheck: The paystub tells all! Income Categories: “Gross Income” The amount you are paid before any deductions or taxes are levied. “Net Income” The amount that actually gets deposited into your checking account. After taxes and deductions. Voluntary Deductions Mandatory Deductions Use this amount to determine your “hourly pay” when you make purchasing decisions.

Tax

Mandatory Deductions FICA- Federal Insurance Contributions Act Medicare & OASDI Medicare/Social Security Employee pays 6.2% & Employer pays 6.2% (12.4% Total) Up to a limit of $106,800 annually (then do not have to pay) Old Age Survivor Disability Insurance (OASDI) Indirectly tied to the amount you put in through your career Employee pays 1.45% & Employer pays 1.45 (2.9% Total) No limit Federal Income Tax Based on W-4 tax form (filled out upon hire) 10% – 35% of Gross Income State Income Tax (Also city/parish as required) Based on the L-4 tax form (filled out upon hire) Louisiana: 2%-6% increasing as income increases (no cap) Some states have no state income tax

Voluntary Deductions Deductions directly from your paycheck. Some can come out “pre-tax” some have to come out “after-tax” or “post-tax”. Pre-tax deductions can lower your taxable income After-tax or Post-tax deductions mean that the taxes have already been paid before you “see” the money. “Voluntary Deduction” Categories: Health insurance premiums Life insurance premiums Retirement contributions (401K) Employee stock purchasing options Uniforms, union dues and other specified job-related items

Tax Forms W2 Tax Form (from HR’s W4 / L4) 1099 Form Employer form sent to IRS and you by 1/31. Details annual salary and withheld tax. Includes Federal & State taxes withheld. 1099 Form Employer form stating how much a contract worker was paid for services. Sent to IRS by employers when reporting income not withheld by the company employing their services. Usually contract workers Can also be issued when personal debt is “charged off” or “forgiven”

What are “Tax Brackets”? USA has progressive tax system, the more you make the higher your tax burden The percentage (%) of tax you pay according on your taxable income as defined by a monetary range. Brackets describe the range of income eligible to be taxed at a certain rate. 2014 Tax Year Brackets 10% $0 -$9,075 15% $9,076 - $36,900 25% $36,901 - $89,350 28% $89,351 - $186,350 33% $186,351 - $405,100 35% $405,101 - $406,750 39% < $406,751

Internal Revenue Service: IRS IRS handles federal taxes File tax returns each year File even if you don’t think you “have made enough money” May get some back! Tax return acts as proof of annual income Think of issues fishermen had with oil spill claims Usually due April 15th Forms include 1040, 1040EZ , 1040A If the deductions you claimed on your W4 aren’t supported with proof, you will owe the government money!

Can you afford yourself? www.JumpStart.org/reality-check Automatic personal financial calculator Enter your life choices and it will tell you how much money you need to earn Free and fun

Thank You! ?? Questions ?? Congratulations! Paychecks, Money and Tax section complete! Thank You! Ann Marie Erie Accounting Services Unlimited