Transcript Payroll - Mr. Singer's Computer Apps. & Keyboarding

Payroll
UNDERSTANDING YOUR PAYCHECK & TAXES
Gross Pay vs. Net Pay
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Gross Pay – The amount of pay you earn
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= Hours worked x Hourly rate
Net Pay – The amount of pay you receive on your check
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= Gross Pay – Taxes Paid
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Also referred to as take-home pay
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Wages – form of income people receive for work they do
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Income – payment people receive for providing resources in the
market
Taxes
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Money that you must pay the government
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Every worker pays payroll taxes. Your employer withholds tax money
and then sends it off to gov’t.
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Deductions – amount taken from your gross pay seen on your pay stub
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Most are for taxes. Can have before & after tax deductions
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Also have deductions for:
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Savings, health care, retirement, dental, vision, long term disability, life insurance
Where does your tax money go?
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Federal gov’t – provides citizens with:
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Roads, bridges, national parks, and national defense
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State gov’t - state roads, state parks, state troopers, public
education
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Local gov’t – street lights, fire & police protection, public education
Payroll Taxes
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FICA (Federal Insurance Contribution Act) 6.2% of gross salary –
means social security tax.
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Social Security – gov’t program assisting that helps disabled & retired
people
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Both employee and employer pay FICA taxes
Federal Withholdings – set up when starting new job via IRS Form W-4
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Medicare – 1.45% of all income, federal program
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Based on your earnings and withholding allowances
Provides health insurance for people 65 years & older or people with
disabilities under 65
State/Local Withholdings – dependent on state and county rates
W-4
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Must fill out when hired
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Federal Form required by the IRS
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Allows employers to determine the amount of income tax to deduct
from employees paychecks
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Based on single/married and allowances
This form will play a role in filing taxes
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Errors in the form can prevent or delay receiving your tax refund