It’s Your Paycheck

Income and Education

• Adults with advanced degrees earn four times more than high school dropouts.

• Adults with a master’s, professional or doctoral degree earned an average of $79,946 annually, while those with less than a high school diploma earned $19,915

• Adults with a bachelor’s degree earned an average of $54,689 in 2005, while those with a high school diploma earned $29.448

• In 2006, 86% of all adults 25 years old and older had completed HS and 28% attained at least a bachelor’s degree

objectives

• Students will:– Define income, taxes and wages– Explain what FICA is– Explain the difference between gross and net pay– Explain what a W-4 form is used for– Explain what a W-2 form is

Why do people work

•To earn incomeDo you have a job?Challenges?

( work on time, overtime)

Surprises? (taxes other deductions, paycheck small)

Income - the payment people receive for providing resources in the market

Wages - the income for providing human resources (labor)

Taxes - government fees on business and individual income, activities, products or property

Gross pay - the amount people earn per pay period before any deductions or taxes are paid

Net pay - the amount people receive after taxes and other deductions are taken out

Income tax - a tax on the amount of income people earn

How much federal income tax was withheld from John's check?

$25.20

What percentage of his income did John pay in federal income tax?

$25.20/$168.00 = .15 = 15%

Q

Q

A

A

Form W-4 is a form that must be completed by employees before they start a job.

FICA is a tax or required contribution resulting from the Federal Income Contributions Act.

Form W-2 is a form employers must provide to employees at the end of each year to report annual income and withholding for the employee's tax return.

What are some goods and services that the federal government provides for citizens?

state roads

national parks

national defense

state parks

state troopers

police protection

public education

fire protection

interstate highways

street lights

federal government

provided goods and

service

What are some goods and services that the state government provides for citizens?

state roads

national parks

national defense

state parks

state troopers

police protection

public education

fire protection

interstate highways

street lights

state government

provided goods and

service

What are some goods and services that the local government provides for citizens?

state roads

national parks

national defense

state parks

state troopers

police protection

public education

fire protection

interstate highways

street lights

local government

provided goods and

service

What are taxes?

Taxes are government fees on business and individual income, activities, products or property. People are required to pay taxes.

What is FICA?

FICA is a tax or required contribution resulting from the Federal Insurance Contributions Act.

What is income?

Income is payment people receive for providing resources in the market.

What are wages?

Wages are a form of income people receive for work they do.

What is net pay?

Net pay is take-home pay; it's the amount received after taxes and deductions have been taken out.

What does FICA fund?

FICA funds Social Security and Medicare.

What is gross pay?

Gross pay is the amount people earn in a pay period before any deductions or taxes are taken out.

What is a W-4 form and for what is it used?

A W-4 form is a form that must be completed by employees before they start a job. It is used by employers to determine the amount of income tax to withhold.

What is a W-2 form?

A W-2 form is a form employers must provide to employees shortly after year-end to report annual income and withholding for the employee's tax return.

Who pays FICA?

Both employees and employers pay FICA.