1. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Chapter 11 Payroll responsibilities within the accounting dept. Family Economics & Financial Education

2. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona The Payroll Department Within the Accounting Department Employer has the responsibility to pay each employee a fair, non-discriminated salary www.salary.com to find your worth, according to zipcodewww.salary.com Pay will vary according to Cost of Living –Real Estate prices and Taxes are the major variable

3. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Payroll Tax evasion Video: http://www.myfoxphilly.com/dpp/money/Nifty_Fifties_Tax_Troubles_051612http://www.myfoxphilly.com/dpp/money/Nifty_Fifties_Tax_Troubles_051612 The five owners and managers of the Nifty Fifty's restaurant chain have been charged with cheating the IRS out of millions of dollars, the U.S. Attorney's office announced on Wednesday. Robert Mattei, 73, of Delray Beach, Florida; Leo McGlynn, 52, of Swarthmore, Pa.; Brian Welsh, 48, of Springfield, Pa.; Joseph Donnelly, 49, of Springfield, Pa.; and Elena Ruiz, 46, of Drexel Hill, PA were charged in connection with an alleged tax evasion conspiracy. U.S. Attorney Zane Memeger said the five cheated the Internal Revenue Service by failing to properly account for more than $15 million in gross receipts, thereby evading $2.2 million in federal employment and personal taxes. http://abclocal.go.com/wpvi/story?section=news/local&id=86638 08http://abclocal.go.com/wpvi/story?section=news/local&id=86638 08

4. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona The Buffet Rule Listen: –www.whitehouse.gov/photos- and- video/video/2012/03/31/week ly-address-passing-buffett-rule- so-everyone-pays-their-fair-shwww.whitehouse.gov/photos- and- video/video/2012/03/31/week ly-address-passing-buffett-rule- so-everyone-pays-their-fair-sh

5. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Payroll Deductions http://www.ehow.com/video_5112528_understa nding-payroll-deductions.htmlhttp://www.ehow.com/video_5112528_understa nding-payroll-deductions.html

6. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Some Departments within accounting 1.Auditing 2.Payroll Benefits Administration: Medical and Retirement 3.Financial Reporting 4.Cost 5.Tax 6.AP/AR management

7. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Accounting transactions Salary –An Expense of doing business –Gross Pay Salary Deductions (optional and required) –Must be electronically deducted before employee receives paycheck –Liabilities of doing business –Transactions: All payables are Credited (deducted from the employee’s paycheck) Employer “owes” this money to different agencies/companies Net Pay – the amount the employee actually takes home after all deductions are made

8. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona The Debits and Credits Gross Salary Expense –DEBITED All Payables (deductions) –CREDITED Net Pay: Cash –CREDITED

9. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona What are Payroll Taxes? Taxes – Required charges imposed on US 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 What are some services in your community that are funded by tax dollars?

10. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Facts On average, approximately 40% of a person’s paycheck will be deducted due to taxes, benefits, and investment choices before they even receive a paycheck Taxes- Required charges imposed on citizens by local, state, and federal governments

11. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Provide public goods and services Taxes What is an item or service that you use every day that is paid for by taxes? Citizens pay many different types of taxes in many different ways –Income tax, sales tax, property tax Largest amount of taxes is paid on income

12. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona REQUIRED TAX DEDUCTIONS 1.Federal Income Tax 1.Based on how much you make 2.US gov’t has 6 brackets 2.State Income tax – flat rate based on state 3.Local Income tax – flat rate based on township 4.FICA (Social Security Tax) – 4.2% 1.For those retired after age 62.5 or legally disabled to work 5.Unemployment tax -.08% 1.Goes to those in your state that are unemployed 6.Medicare – 1.45% 1.Goes to those in our country who are uninsured, underinsured, or those retired that are eligible for gov’t aide

13. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Federal Income Tax Brackets 1.10% - $0 to $8,375 2.15% - $8,375 to $34,000 3.25% - $34,000 to $83,600 4.28% - $83,600 to $174,400 5.33% - $171,850 to $373,650 6.35% - $373,650 and up

14. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Taxes continued Internal Revenue Service (IRS) – Collects federal taxes, issues regulations, and enforces tax laws written by the United States Congress for individuals and private businesses

15. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona OPTIONAL PAYROLL DEDUCTIONS 1.Medical Benefits – health insurance 1.Employer responsibility to have a relationship with 1 or more health insurance companies 2.Offer benefits to your employees 3.Employer pays a %; the employee pays a % (premium) 4.More the employer pays, the greater expense BUT it could make the employer more desirable/loyalty 2.Retirement Planning – 1.Employer offers an investment firm to withdraw a % of paycheck and invest in the stock market or other investment tool 1.401K (mutual funds or groups of stocks) 2.IRA (retirement account, with interest) Money is UNTOUCHABLE until age 62.5 (penalty is 20% for early/partial withdrawal)

16. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Largest Investment firms THAT Employers work with Vanguard and Fidelity Employee meets with a Financial Advisor to discuss investment strategy and retirement goals at time of Hiring Here is the Discussion: –How much should I invested each week from my Gross Pay? –What stocks/investments/401ks should I invest in? –What is my RISK tolerance? –How long do I plan to work for? –What age would I like to retire at? –How much $ do I want waiting for me when I retire so I live comfortably?

17. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona How are Taxes Paid? 1.By Workers Through deductions made from your Gross Salary by your Employer – Income Taxes 2.By homeowners – Real Estate and School Taxes 3.By shoppers – Sales Tax 4.By businesses – their profit is taxed

18. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Real Estate taxes These taxes are separate and not deducted from one’s paycheck This is owed once a year by homeowners – check sent to Local Government Broken into 2: –Property – based on value of home –School – based on needs of school

19. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Starting a New Job 1. Fill out employment forms Form W-4 and Form I-9 2. Choose how to receive the paycheck (if options are available)

20. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona 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 –Dependents lower your taxes! Dependent – a person who relies on the taxpayer for financial support

21. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona 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

22. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Form I-9 Employment Eligibility Verification Form Verifies 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 Driver’s License Passport Social Security card Birth Certificate

23. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Methods for paying employees 1.Live Check 2.Direct Deposit

24. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Reading a Paycheck Family Economics & Financial Education Why is it important to read your paycheck stub?

25. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Paycheck Stub –A document included each pay period which outlines paycheck deductions On-The-Go Employee Beakens, Joe SSN 201-92-4856 Check # 164 Check Amount $1,102.98 Employee Address 293 Michael Grove Billings, MT 59102 Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $106.00 $40.82 $83.91 $19.62 $0.00 $0.00 $503.46 $117.72 $636.00 $244.92 $0.00 $0.00 Totals $250.35$1,502.10 Pay Period 6/11/2009-7/11/2009

26. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Personal Information –States the employee’s full name, address, and social security number –Always check to ensure this information is correct On-The-Go Employee Beakens, Joe SSN 201-92-4856 Check # 164 Check Amount $1,102.98 Employee Address 293 Michael Grove Billings, MT 59102 Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $106.00 $40.82 $83.91 $19.62 $0.00 $0.00 $503.46 $117.72 $636.00 $244.92 $0.00 $0.00 Totals $250.35$1,502.10 Pay Period 6/11/2009-7/11/2009

27. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Pay Period –The length of time for which an employee’s wages are calculated; most are weekly, bi- weekly, twice a month, or monthly –The last day of the pay period is not always payday to allow a business to accurately compute wages On-The-Go Employee Beakens, Joe SSN 201-92-4856 Check # 164 Check Amount $1,102.98 Employee Address 293 Michael Grove Billings, MT 59102 Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $106.00 $40.82 $83.91 $19.62 $0.00 $0.00 $503.46 $117.72 $636.00 $244.92 $0.00 $0.00 Totals $250.35$1,502.10 Pay Period 6/11/2009-7/11/2009

28. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Gross Pay –The total amount of money earned during a pay period before deductions This is calculated by multiplying the number of hours worked by the hourly rate If a person is on salary, it is the total salary amount divided by the specified time period On-The-Go Employee Beakens, Joe SSN 201-92-4856 Check # 164 Check Amount $1,102.98 Employee Address 293 Michael Grove Billings, MT 59102 Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $106.00 $40.82 $83.91 $19.62 $0.00 $0.00 $503.46 $117.72 $636.00 $244.92 $0.00 $0.00 Totals $250.35$1,502.10 Pay Period 6/11/2009-7/11/2009

29. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Net Pay –The amount of money left after all deductions have been withheld from the gross pay earned in the pay period On-The-Go Employee Beakens, Joe SSN 201-92-4856 Check # 164 Check Amount $1,102.98 Employee Address 293 Michael Grove Billings, MT 59102 Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $106.00 $40.82 $83.91 $19.62 $0.00 $0.00 $503.46 $117.72 $636.00 $244.92 $0.00 $0.00 Totals $250.35$1,502.10 Pay Period 6/11/2009-7/11/2009

30. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Deductions –The amount of money subtracted from the gross pay earned for mandatory systematic taxes, employee sponsored medical benefits, and/or retirement benefits On-The-Go Employee Beakens, Joe SSN 201-92-4856 Check # 164 Check Amount $1,102.98 Employee Address 293 Michael Grove Billings, MT 59102 Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $106.00 $40.82 $83.91 $19.62 $0.00 $0.00 $503.46 $117.72 $636.00 $244.92 $0.00 $0.00 Totals $250.35$1,502.10 Pay Period 6/11/2009-7/11/2009

31. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Year-to-Date Total of 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 On-The-Go Employee Beakens, Joe SSN 201-92-4856 Check # 164 Check Amount $1,102.98 Employee Address 293 Michael Grove Billings, MT 59102 Pay Type- Gross Pay DeductionsCurrentYear-to-date $1,353.33Federal Withholding State Withholding Fed OASDI/EE or Social Security Fed MED/EE or Medicare Medical 401K $106.00 $40.82 $83.91 $19.62 $0.00 $0.00 $503.46 $117.72 $636.00 $244.92 $0.00 $0.00 Totals $250.35$1,502.10 Pay Period 6/11/2009-7/11/2009

32. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Conclusion Review the following concepts: –Form W-4 –Form I-9 –Reading a paycheck definitions Net vs. gross pay Required and Optional deductions

33. 7.13.2.G1 © Family Economics & Financial Education –Revised August 2009– The Essentials to Take Charge of Your Finances – Paychecks Advanced Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona Activity Calculating Payroll Using Excel to calculate payroll and make deductions –Chapter 11 on website