Independent Living October 12, 2015 Payroll Taxes

0bk 0bk First: A video from “FRIENDS”

Gross Pay vs Net Pay Explain why someone earns $100 for work, but receives check for less than $100? Gross Pay: Gross pay is the amount of money you earn before taxes Net Pay: Net pay is the amount of money you are owed after taxes are withdrawn Gross Pay - Other Withholdings - Taxes = Net Pay ***Other Withholdings will always be deducted before taxes***

Social Security Tax includes: ◦ Retirement benefits ◦ Benefits for dependents ◦ Benefits for disabled and parents AKA: Federal Insurance Contributions Act (FICA) Using Payroll Taxes Tax TypeTax Rate Social Security (FICA)6.20% Medicare1.45% Total Payroll Taxes7.65%

Using Payroll Taxes Tax TypeTax Rate Social Security (FICA)6.20% Medicare1.45% Total Payroll Taxes7.65% Medicare Taxes includes: ◦ Provides benefits for certain individuals when they reach age 65

An Employee earns $1,000 in a pay period. Using the tax table, what are the payroll taxes? ◦ FICA = $62.00 ◦ Medicare = $14.50 How much is the employee’s Net Pay? ◦ 1,000 – = $ Example: Tax TypeTax Rate Social Security (FICA)6.20% Medicare1.45% Total Payroll Taxes7.65%

Income Tax Employers calculate income tax for you ◦ Use W-4 forms Income tax depends on multiple things ◦ What state you live in ◦ Income bracket you fall in

A single employee earns $4,000 in a pay period. Using the tax tables, what are the taxes being paid? ◦ FICA = $248 ◦ Medicare = $58 ◦ Federal Income Tax= $400 How much is the employee’s Net Pay? ◦ $4,000-$706= $3,294 Example: Tax TypeTax Rate Social Security (FICA)6.20% Medicare1.45% Total Payroll Taxes7.65%

Income Tax Provides: Income taxes help pay for: ◦ National defense, vets, and foreign affairs ◦ Social Programs ◦ Physical, human, and community development ◦ Law enforcement ◦ Interest on national debt

Video Explanation L8

Task Complete the assignment numbers 1-10 On all math problems, YOU MUST SHOW ALL WORK Due tomorrow beginning of class!