1. Double the Salary
An employee starting a new job has the option to choose how he is paid for the first twenty days of work. He works five days a week, for four full weeks. Make the best choice for the new employee after comparing the two options.
Payment Option 1:
For the first twenty days of work, the new employee will be paid $500 a day.
Payment Option 2:
The pay will be $0.01 for the first day. Each day the pay will double. So, it will be $0.02 the second day, $0.04 the third day, $0.08 the fourth day, etc. By the end of twenty days, how much money will the employee have made?

2. Double the Salary Payment Option 1: Payment Option 2:
$ a day * 20 days = $10,000
Payment Option 2:
Day 1
$ 0.01
Day 11
10.24
Day 2
.02
Day 12
20.48
Day 3
.04
Day 13
40.96
Day 4
.08
Day 14
81.92
Day 5
.16
Day 15
163.84
Day 6
.32
Day 16
327.68
Day 7
.64
Day 17
655.36
Day 8
1.28
Day 18
Day 9
2.56
Day 19
Day 10
5.12
Day 20
Total:
$10,485.75

3. Solution Payment Option 1: $500.00 a day * 20 days = $10,000.00
This is a better choice for the new employee as he will be making $10,485.75
This is $ more than if he would have chosen Payment Option 1

4. An Earthlings Guide to Understanding Paychecks
Family Economics & Financial Education
Planet Paycheck
An Earthlings Guide to Understanding Paychecks

5. Planet Paycheck Navigation
Welcome to Planet Paycheck!
While visiting Planet Paycheck the vast
world of paychecks will be explored!

6. First Job!
Miss Patty Paycheck has just received her first paycheck from her new job!
But, the paycheck amount seems a little lower than she had figured. How could that be?
Taxes – Required charges of citizens by local, state, and federal governments
Taxes are deducted from all employees paychecks
Used to provide public goods and services
Roads, police, schools, governmental agencies, fire and emergency services

7. Starting a New Job To receive a paycheck, an employee must:
Complete a Form W-4
Employee’s Withholding Allowance Certificate
Determines the amount of money withheld for taxes

8. Starting a New Job Complete a Form I-9
Used to prove the identity of people and avoid hiring non United States citizens
Must provide at least 2 of the following
passport
driver’s license
U.S. military card
Social Security card
birth certificate

9. Starting A New Job Form W-2 (Wage and Tax Statement)
States the amount of money earned and taxes paid throughout the previous year
Used to file income taxes by April 15th
Individuals may be exempt from filing federal withholdings if they make less than a certain amount per year

10. Methods for Paying Employees
Paycheck
Paper check with stub
Least secure payment method because the employee is responsible for handling the paycheck
2. Direct Deposit
Employers directly deposit employee’s paycheck into the authorized employee’s bank account
Payroll Card
A payroll card electronically carries the balance of the employee’s net pay

11. Payment Method Pros and Cons
Paycheck
Pros:
Employee controls when the check is deposited
Cons:
Least secure, employee responsible for getting it to the bank
Direct Deposit
No direct handling of check
Employee knows exactly when he/she will be paid
Payroll card
Pros:
Wages automatically loaded onto a card
Cons
May charge fees for use of the card

12. Reading A Paycheck Stub
Items on a paycheck stub include:
Personal Information -The employee’s full name, address, and social security number or employee identification number
Pay Period -The length of time for which an employee’s wages are calculated
Most businesses pay employees either weekly, bi-weekly, or monthly

13. Reading A Paycheck Stub
Gross Pay – The total amount of money earned before payroll withholdings
If a person earns an hourly wage, gross pay is calculated by multiplying the number of hours worked by the wage

14. 30 hours x $6.00/hr = $180.00 for 2 weeks
What is the Gross Pay?
If Miss Patty Paycheck worked at Terrific Tacos for $6.00/hour for 15 hours a week what will her gross pay be?
# hours worked x wage = gross pay
15 hours x $6.00/hr = $90.00/week
What is Miss Patty Paycheck’s gross pay for a two week pay period?
30 hours x $6.00/hr = $ for 2 weeks

15. Reading A Paycheck Stub
Payroll Withholdings – The amount of money subtracted from the gross pay for taxes. Typically about 30% of your paycheck!
Withholding Tax – The amount required by law for employers to withhold from earned wages to pay taxes
FICA-Federal Insurance Contribution Act
Fed OASDI/EE (Federal Old Age Survivors Disability Insurance Employee Employment Tax) or Social Security - helps provide retirement income for the elderly and pays disability benefits
Fed MED/EE (Federal Medicare Employee Employment Tax) or Medicare - health care program for the elderly and disabled

16. Reading A Paycheck Stub
Net Pay – The amount left after all payroll deductions have been taken from the gross pay
Net pay is also referred to as “take home” pay

17. Miss Patty Paycheck’s Paycheck Stub
Miss Patty Paycheck’s paycheck includes:
Gross Pay $180.00
Payroll Withholdings:
Federal Withholding Tax $14.10
State Withholding Tax $5.45
FICA $13.77
What is her Net Pay?
Gross Pay – Payroll Withholdings = Net Pay
$ – ($ $ $13.77) = $146.68

18. Reading A Paycheck Stub
Year-to-Date- Totals all of the deductions which have been withheld from an individual’s paycheck from January 1 to the last day of the pay period indicated on the paycheck stub

19. Sample Paycheck Stub Terrific Tacos Employee Paycheck, Patty
SSN/Employee Identification Number
Check # 164
Check Amount (net pay)
$146.68
Employee Address 293 Michael Grove Billings, MT
Pay Type- Gross Pay
Deductions
Current
Year-to-date
 $180.00
Federal Withholding State Withholding FICA
$14.10 $5.45 $13.77
$ $ $330.48
Totals
$33.32
$757.38
Pay Period 6/11/2007-6/25/2007

20. Remember to Review
It is important to review each paycheck stub to identify any possible mistakes!
If a mistake is found, contact the employer for clarification

21. Thanks for Visiting Thank you for visiting planet paycheck.
Good luck with all of your future paycheck journeys!