Transcript You and Your Money - Virginia Guilford

You & Your Money
Class 1, Part 1 – Your Income
International Center
at Catholic Charities Community Services
April 2013
Instructor: Virginia Guilford
Class Schedule
• Class 1 - Thursday April 11, 4:00 – 5:00 PM
– Your Income
– Your Taxes
• Class 2 – Thursday April 18, 4:00 – 5:00 PM
– Your Budget
– Your Bank Accounts
• Class 3 – Thursday April 25, 4:00 – 5:00 PM
– Your Credit
– Learning More
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Please Be Aware
• This course does not give you professional
advice
– I am not a lawyer.
– I am not an accountant.
– I am not a banker.
• This course explains the basic concepts and
vocabulary that you need for understanding
work, taxes, budgeting, banking and credit.
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Your Income
• Income is generally the money that you
receive from your work.
• Your Work
– What kind of a worker will you be?
– When are you expected to work?
– How will you be paid?
– What benefits will you receive?
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Kinds of Workers
• Employee
Working as an employee means that your pay and
your working conditions are regulated by Federal and
State laws about employees
– Full-Time Employee
– Part-Time Employee
– Hourly Employee
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Kinds of Workers
• Freelance / Contractor
Working as a free-lancer or independent contractor is
like having your own business.
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Kinds of Workers
• Working for Tips
Some workers get no pay at all, or very little pay. The only money they
make is from the tips they receive from customers. Workers in a nail
salon may work for tips only. Most waiters and taxi drivers earn only a
very small salary, and the majority of the money they make is from
tips.
• Working “Off the Books”
‘Off the Books’ income is not reported to the government for tax
purposes, and no taxes or social security payments are made.
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Working Hours and Paid Time Off
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Working Hours
Holidays
Sick Days
Vacation
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Working Hours
• A full-time employee in a large corporation
generally works 35 or 40 hours a week.
• The traditional hours for work were 9:00 AM
to 5:00 PM, but now are 8:30 – 5:30, or even
8:00 to 5:00
• Part-time workers commonly work less than
20 hours a week.
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Holidays
Holidays are days when your company is closed, and
you are not obliged to come to work.
• Holidays observed by almost everyone:
– Thanksgiving (the 4th Thursday in November)
– Christmas Day (December 25)
• Additional holidays observed by most corporations:
– New Year’s Day (January 1)
– Memorial Day (last Monday in May)
– Independence Day (July 4)
– Labor Day (the first Monday in September)
• Other holidays commonly observed here in New York:
– Martin Luther King Day (3rd Monday in January)
– Presidents’ Day (3rd Monday in February)
– Good Friday (Friday before Easter Sunday)
– Columbus Day (a holiday in New York State, 2nd Monday in October)
– Veterans’ Day (November 11)
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Sick Days
• Most companies allow employees to stay
home but still be paid if they are sick.
• This kind of paid time off is called Sick Pay, and
the days you take off because of being sick are
‘sick days’.
• The number of sick days you can take is
different at different companies.
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Vacation
• One or two weeks of paid vacation each year
is usual for full-time employees.
• Some companies are closed for a certain time
when everyone takes their vacation.
• Some companies require you to schedule your
vacation by asking for approval from your
manager.
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Personal Days & Family Medical Leave
• Sometimes, a company will give employees
two or three paid personal days off in addition
to vacation days.
• Large companies are required by the Family
Medical Leave Act to provide 12 weeks of
unpaid leave for extended family situations,
such as illness or the birth of a child.
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Union Membership
• Unions represent their members in
negotiations for pay and benefits
• Some jobs are associated with unions
– Truck Drivers (and others) are represented by the International
Brotherhood of Teamsters
– Actors are represented by Actors Equity Association
• Union membership cannot be
required
– You may not be required to be a union member. But, if you do
not work in a Right to Work state, you may be required to pay
union fees.
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Getting Paid
• Gross Pay and Net Pay
• Payment Method
• Pay Periods
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Gross Pay & Net Pay
• Gross Pay is the total amount you have
earned.
• Net Pay is what you actually receive; it is your
gross pay minus any amounts that have been
withheld, such as:
– Taxes
– Union Dues
– Health Insurance
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Payment Method
• Direct Deposit – your pay is deposited directly
into your bank account by your employer.
• Check – your pay is given to you in a check.
• Cash – your pay is given to you in cash.
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Pay Periods
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Weekly
Every 2 Weeks
Twice a Month
Monthly
Daily/End of Project
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Benefits
• Benefits are valuable things that you get from
your employer in addition to the money that
is your salary.
– Health Insurance
– Life Insurance
– Disability Insurance
– Workers Compensation
– Retirement Savings Contributions
– Other Benefits
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Health Insurance
• Health Insurance
– Not all employers offer health insurance
– If it is offered, you may be required to pay some or
all of the costs
– Many people hope to get a job that includes a
health insurance benefit
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Life Insurance
• Life Insurance
– Typically an employer will offer a life insurance
policy for the amount of your annual salary
– Additional multiples of your annual salary might
be available at extra cost to you
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Disability Insurance
• Disability Insurance
– Provides some income to you if you are injured so
badly that you cannot work.
– Social Security also provides some insurance
against disability.
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Workers Compensation
• Workers Compensation.
– A kind of insurance that covers you if you cannot
work because of an injury that happened at work.
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Retirement Savings Contributions
• Retirement Savings Contributions
– IRS has rules that determine what percent of your
salary can be put into tax-free retirement savings.
– Cannot take out this money until age 59 ½
• Early withdrawal is taxable
• Early withdrawal has penalties
• 401k
• IRA
• Retirement Savings Employer Matching Plans
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Other Benefits
• Other Benefits
– Room & Board
– Meals
– Free Apartment
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You & Your Money
Class 1, Part 2 – Your Taxes
International Center
at Catholic Charities Community Services
April 2013
Instructor: Virginia Guilford
Your Taxes
• All US citizens and resident aliens need to pay
taxes if they have over a certain amount of
income.
• Types of Taxes (Federal, State, City, Social
Security, and Medicare)
• Tax Periods
• Tax Withholding
• Estimated Tax Payments
• Tax Refunds
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Types of Taxes
• Federal
• State
• City
• Social Security
• Medicare
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Federal Taxes
• Collected by the US government through its
tax collection agency, the Internal Revenue
Service (the IRS)
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State Taxes
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State taxes are taxes that each state collects
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Some states have an income tax, some do not.
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Some states collect a ‘commuter’ tax – an income tax for people who work
in the state, but do not live there
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In addition to income taxes, some states and/or counties collect property
taxes which are based on the value of any property that you own
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City Taxes
• A few large cities collect income taxes
– New York City collects an income tax for residents
– Yonkers collects an income tax for residents
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Social Security Taxes
• Social Security pays a small pension to older people
and people who are disabled
• To fund Social Security, 15.30% of all wages up to a
certain amount ($113,700 in 2013) must be paid to
Social Security
– Employers pay half this amount for their employees, and withhold the other
half from their employees’ pay
– Self-employed people must pay the full amount themselves
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Medicare Taxes
• Medicare is the health insurance system for people
over 65
• To fund Medicare, 2.9% (in 2013) of all wages must
be paid to Medicare
– Employers pay half this amount for their employees, and withhold the other
half from their employees’ pay
– Self-employed people must pay the full amount themselves
– Starting in the year 2013, the tax percentage rate will be increased for higherincome individuals, and the income subject to the Medicare tax will be
expanded to include investment income.
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Tax Periods
• Annual Tax Period Jan 1 – Dec 31
– Annual tax is based on the total amount of money
you earned in the previous year (from 1/1 to
12/31)
• Quarterly Tax Periods
– First Quarter/Q1 Jan 1 – Mar 30
– Second Quarter/Q2 Apr 1 – Jun 30
– Third Quarter/Q3 Jul 1 – Sep 30
– Fourth Quarter/Q4 Oct 1 – Dec 31
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Tax Withholding for Employees
• Tax Withholding is a part of your salary that your
employer uses to pre-pay your taxes.
– If you are an employee, your employer will withhold
part of your salary and send it to the Federal and State
tax authorities.
– Your employer will ask you to fill out a W-4 form when
you start work to help him estimate how much
income tax you will owe at the end of the year.
– The employer then deducts a percentage of that total
amount in each paycheck (tax withholding), and sends
it to the Federal, State, and City governments.
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Estimated Tax Payments for
Freelancers
• If you are a freelance worker or a contractor,
tax payments are not withheld from your pay.
• You are expected to estimate what you will
owe, and make an estimated tax payment at
the end of each quarter (Apr 15, Jun 15, Sep
15, and Jan 15).
• Note: if the 15th of the month is on a Sunday
or a holiday, the due date is the next day.
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Tax Refunds
• If you had more tax withheld from your
income than you owe, you will get a refund
after you file your taxes.
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Where to Get Tax Help
• If you want to know more about taxes in general, you can
visit the IRS Understanding Taxes website at
www.irs.gov/app/understandingTaxes/index.jsp
• The IRS (Internal Revenue Service) has a website
(www.irs.gov/ ) and offices in most cities where you can get
answers to specific questions you have about your Federal
income taxes.
• State tax departments also have websites and phone
numbers for questions. (The New York State Department of
Taxation & Finance website is www.tax.state.ny.us/ )
• Reputable tax preparers, such as tax accountants and
companies like H&R Block can prepare your Federal, State,
and City tax returns for a fee.
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You & Your Money Glossary
• A list of commonly used financial terms with
definitions.
• Go to www.virginiaguilford.com and download
the Glossary from the “Docs and Links” page.
(The PowerPoint presentations used in this class
are also available there)
• Or send your request to
[email protected]
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