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This comprehensive guide explores essential aspects of paychecks, including average earnings, work hours, and common deductions. Understanding how federal and state taxes impact your paycheck is crucial, as is knowing the hidden costs associated with working. Navigate job offers wisely by comparing salary, benefits, and additional costs like transportation and childcare. Learn about important paperwork like W-4 and I-9 forms, and how to interpret your paycheck stub. Enhance your financial literacy to make informed employment decisions and secure your financial future.
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Facts • In 2009, the average worker earned $43,460. • Employed persons work an average of 7.5 hours on the days they work. • In 2009, 72% of employed workers worked over 35 hours per week • The FBI estimates that over four million paper paychecks are stolen annually. • Almost 31% of an individual’s paycheck is deducted.
Paycheck Essentials Financial Literacy
Job Offers • They have offered you the job! • So has someone else. • No what? How do you determine which offer is better?
Comparing Job Offers • Remember the two job offers we looked at last week? • What were some of the things we looked at? • Here are some other things to consider:
The Hidden Costs of Working • How much is the job going to cost you? • Clothes, Equipment • Transportation • Child Care • Food
In The Beginning • So you have decided - You got the job! • Time to get started • So many more decisions to make…
Before the first check • Federal Forms • W-4 • I-9 • How to receive paycheck (if options are available) • Insurance • Retirement
Form W-4 Employee’s Withholding Allowance Certificate • Determines what percentage of an employee’s pay will be withheld for income taxes • See example of form on page 159
Taxes Charges imposed on citizens by local, state, and federal governments Purpose – Provide public goods and services How – Income tax, Sales tax, Property tax – Largest portion come from income
Income Taxes • Employer is required to take income taxes directly out of an employee’s paycheck • Both Federal and State • Amount determined by information on W-4 • Allowances • Dependent – a person who relies on the taxpayer for financial support
Form I-9 Employment Eligibility Verification Form • Must provide documentation which establishes identity and employment eligibility • Documentation • Driver’s License • Passport • Social Security Card • Birth Certificate
How to receive paycheck Employer may offer options that include: • Paper paycheck • Direct deposit • Payroll card
Pay Periods When can you expect to receive your first check? Pay Period – the length of time for which the employee’s wages are calculatedPay Periods may be weekly, bi-weekly, twice a month, monthly.
Reading A Paycheck Stub • Example on page 158 • Personal information • Check date • Pay period • Gross pay • Deductions • Net Income - Take Home
Paycheck Stub • Gross Income • Amount earned before any withholding • Income Tax • Federal and State withholding • FICA – Federal Insurance Contribution Act • Social Security and Medicare • Other Optional • Medical insurance premiums • Retirement plans • Year-to-Date Figures Net Income
Summary • Hidden Costs Of Working • Comparing Job Offers • Form W-4 • Form I-9 • Paycheck Options • Pay Periods • Withholding • Reading Paycheck Stubs
