Paychecks and Tax Forms Take Charge of your Finances Dollars & Sense Unit 2: Taxes & Paychecks, Part 2: W4 I9
Objectives Upon completion of this lesson, students will be able to: Demonstrate a basic knowledge of the terms associated with a paycheck. Explore the methods for paying employees. Understand the systematic deductions removed from each paycheck. Complete standard tax forms required on the job to benefit each student’s individual situation. Incorporate the use of reading a paycheck into daily life. Gain an understanding of take home pay by strengthening knowledge of various paycheck deductions.
Where Does My Money Go? Almost 31% of an individual’s paycheck is deducted Taxes are the largest expense most individuals will have Therefore, it is important to understand the systematic deductions U.S. tax system operates on an ongoing payment system Taxes are immediately paid on income earned
Taxes Taxes – Compulsory charges imposed on citizens by local, state, and federal governments. Used to provide public goods and services. Largest amount of taxes a person pays is on his/her income. Internal Revenue Service (IRS) – Collects federal taxes, issues regulations, and enforces tax laws written by the United States Congress.
Starting a New Job To receive a paycheck, an employee must: Complete a Form W-4 Employee’s Withholding Allowance Certificate Complete a Form I-9 Employment Eligibility Verification
Form W-4 Employee’s Withholding Allowance Certificate Determines the percentage of gross pay which will be withheld for taxes Allowances Used to determine the amount of federal taxes withheld from the paycheck A person may claim a personal allowance if no one else claims the person as a dependent Dependent – a person who relies on the taxpayer for financial support
7 How do I complete a W-4 form? Follow these easy directions…
8 Complete lines 1 & 2… Provide your name, address, and Social Security number…
9 Complete line 3… Check box for marital status
10 Complete lines 5 & 6… Insert the number of dependents you will claim. BUT… If you are under 18 and you are already claimed by another person, you must claim “0”
11 How do I figure how many allowances to claim? Next, complete the Personal Allowances Worksheet It’s on the same page as the W-4
12 How do I figure how many allowances to claim? Complete lines A through G…
13 How do I figure how many allowances to claim? Now add the number of dependents you have claimed and write the total on line H…
14 How do I figure how many allowances to claim? You will probably claim either a ‘0’ or ‘1’ AND… with “0”, the highest amount will be withheld
Form I-9 Employment Eligibility Verification Form Used to verify the eligibility of individuals to avoid hiring undocumented workers or others who are not eligible to work in the United States Must provide documentation which establishes identity and employment eligibility Examples include driver’s license, passport, Social Security card, and birth certificate
Employers Must Complete