Aim: Income Statements Course: Math Literacy Do Now: What are some deductions that lower the money you earn at work? Aim: Why is your take home pay lower.

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Presentation transcript:

Aim: Income Statements Course: Math Literacy Do Now: What are some deductions that lower the money you earn at work? Aim: Why is your take home pay lower than your salary? withhold taxes FICA tax Medicare union dues 401K charity

Aim: Income Statements Course: Math Literacy Reading Pay Stubs Barbara started a new job and wants to verify that her net pay has been computed correctly. Her gross pay per pay period is $ She has the following deductions: FICA tax 6.2%, Medicare tax 1.45%, federal withholding tax $47.51, state withholding tax $16.62, retirement insurance contribution $9.00, disability insurance fee $2.56, medical insurance fee $12.00, and dental insurance fee $6.00. What should her net pay be for this pay period? $ What percentage of her gross pay for this pay period accounts for all her deductions?

Aim: Income Statements Course: Math Literacy Reading Pay Stubs Examine Lorna’s biweekly pay stub. Assuming that Lorna’s salary and deductions remain the same through the calendar year. How much will be taken out of her total annual gross salary for federal and state taxes? $33,341.36

Aim: Income Statements Course: Math Literacy Did Employer Withhold Enough? Lorna knows that her total income tax is usually 30% of her annual salary. At the rate of deduction shown on this pay stub, will Lorna’s employer have taken enough out of each pay check to meet her tax obligation for the year? NO!

Aim: Income Statements Course: Math Literacy W-2 Form A W-2 is a yearly accounting of tax withholdings. On Jan. 30 th, Joanne Toscano received this W-2 form from her employer. How much did Joanne pay in taxes during the year? What percent of Joanne’s gross income did she actually take home?

Aim: Income Statements Course: Math Literacy Deferred Taxes Amy Springfield works for Pound Ridge Financial Planners. Her employer uses an electronic W-2 form as shown below. What accounts for the difference between her wages listed in Box 1 and her social Security and Medicare wages listed in Boxes 3 and 5? tax-deferred contributions to retirement plan Amy pays 20% federal tax and 7% state tax. How much did she save in taxes by putting money in her tax deferred and flexible spending accounts?

Aim: Income Statements Course: Math Literacy 1099’s ____ An income tax statement for reporting income other than salaries, wages. and tips. Usually not tax is withheld – Filer must enter income on tax return and calculate taxes owed IntInterest income 1099-DivDividend income 1099-RRetirement income