My Paycheck - CTECS · Check your work by referring to the My Paycheck Key. ... FEDERAL DEDUCTIONS...

My Paycheck

Summary

No matter where you work, when you receive your paycheck it’s important to understand the various

deductions that have been made. Depending on your job, you may be salaried, paid by the hour, paid

by commission, or some combination of these. Being able to calculate the amount you will receive is

something that you should be able to do!

Workplace Readiness Skill

Mathematics: Uses mathematical reasoning to accomplish tasks.

Workplace Readiness Definition

using mathematical reasoning and processes to accomplish job-specific tasks (e.g., using graphs

and charts to estimate expenditures for a construction job, using decimals and percentages in

retail applications)

making calculations related to personal finance (e.g., wage rates, paycheck deductions, taxes)

Vocabulary

Gross pay Commission Salaried

Net pay Optional Deductions Hourly compensation

Deductions Required Deductions

Context Questions

Have you ever received a paycheck?

Did you understand all of the deductions?

Given enough information, can you calculate your net pay?

Guidelines

1. Look up the vocabulary terms. Make sure that you understand each one.

2. Prerequisite Knowledge/Skills

You should be able to:

Add, subtract, multiply, and divide using decimal numbers

Convert a percent to a decimal

Calculate with percentages

Solve simple equations

3. Complete the My Paycheck exercise.

Evaluation

Check your work by referring to the My Paycheck Key.

Reflection after Completion

Did you solve all or most of the problems correctly?

Which ones were the most difficult for you?

Were you able to apply the technique for solving word problems?

What are the benefits of knowing how to calculate net pay?

Resources:

If you need a review of percentages or more practice, go to:

http://www.mathsisfun.com/percentage-menu.html

My Paycheck

A. Let’s start with some straight forward word problems.

Item # Item

1. If Jenny’s salary is $350 per week and she works 40 hours, what does she earn per hour?

2. John makes $10.50 per hour. If he works 35 hours this week, what is his gross pay?

3. Mr. Marlon pays minimum wage to the cashiers in his store. If minimum wage is $7.25 per hour, how

much does a cashier make who works 40 hours per week?

4. Rosalee works as a sales representative for a furniture manufacturer and gets paid a commission of

4.5% of the amount of merchandise that she sells. Last week her sales totaled $4000. How much is

her commission?

5. George works for a garden center where he is paid a salary of $350 per week plus a commission of 6%

of the amount of merchandise that he sells. Last week his sales totaled $1,850. What was his gross

pay?

6. Maria works at Tolbert’s Machine Shop and was just notified that she will receive a 7% annual raise.

Her current salary is $28,500 per year. How much is her raise?

B. Solve the following more complex word problems about gross pay, net pay, and deductions.

7. Financial planners recommend that families save about 5% of their take-home pay. Ed and Sherrie

save $90 each week from their combined paychecks, which total $1,200. What percent do Ed and

Sherrie save?

8. Each week, $88 is deducted from Richard’s paycheck for taxes. If his salary is $400 a week, what

percent of his pay is deducted? What is Richard’s net pay after the taxes are deducted?

C. Answer questions 9 – 11 using the following information. The questions are multiple choice, circle the

correct response.

Andy earns $1,995.75 per month. The table below shows the federal and state deductions that are

subtracted from Andy’s monthly paycheck.

FEDERAL DEDUCTIONS

Federal Income Tax $221.65

Social Security Tax $123.74

Medicare Tax $28.94

STATE DEDUCTIONS

State Income Tax $35.00

State Unemployment Insurance and State Disability Insurance $20.50

9. What is the total amount of federal deductions from Andy’s paycheck?

a. $345.39

b. $374.33

c. $409.33

d. $429.83

10. After all the federal and state deductions are taken out, Andy’s net monthly income is:

a. $1,940.23

b. $1,774.10

c. $1,621.42

d. $1,565.92

11. Andy is considering paying 1% of his monthly gross income for extra health coverage. How much

would this additional coverage cost?

a. $19.96

b. $15.66

c. $1.57

d. $1.99

D. This section is a set of items based on a scenario. Read the scenario and answer questions 12 – 15.

You are in college. Finally you are free and on your own, however you recognize that you need some extra money and have decided you need to get a part-time job. You want a job where you can make tips and have flexible hours ... working at a restaurant would fit those requirements. Even though you don’t have any restaurant experience, you have a good resume and interviewed well. You emphasized that you are very dependable and have a good attitude. You got a job bussing tables!

Now you need to figure out how much money you will be making.

12. You are making $7.90 an hour. You will be working 20 hours per week, Thursday – Sunday, 5 hours

each day. What is your gross pay for one week?

13. You figured out your gross pay, but you really want to know how much money you will be taking home

– which is your net pay. You were informed at your orientation that deductions include federal taxes

(15%), FICA (6.0%), and Medicare (1.65%). What is your net pay for one week?

14. You got your first paycheck and you were excited to see that it was more than you thought! You

forgot to figure in tips. As a busser, your employer adds 5% for tips to your gross pay as income. With

tips, how much is your net pay?

15. You have now been at this job for 1 year and decided to ask your supervisor for a raise. You pointed out that you have never missed a day of work, you stayed late 8 times when extra help was needed, and came in 5 times to fill in when others called in sick. You asked for a raise of 50 cents per hour and got it! What is your new gross pay for one week including your 5% tips?

My Paycheck - KEY

A. Let’s start with some straight forward word problems.

Item # Item

1. If Jenny’s salary is $350 per week and she works 40 hours, what does she earn per hour?

SOLUTION: $350 ÷ 40 = $8.75 per hour

2. John makes $10.50 per hour. If he works 35 hours this week, what is his gross pay?

SOLUTION: $10.50 × 35 = $367.50

3. Mr. Marlon pays minimum wage to the cashiers in his store. If minimum wage is $7.25 per hour, how

much does a cashier make who works 40 hours per week?

SOLUTION: $7.25 × 40 = $290

4. Rosalee works as a sales representative for a furniture manufacturer and gets paid a commission of

4.5% of the amount of merchandise that she sells. Last week her sales totaled $4,000. How much is

her commission?

SOLUTION: 4.5% of $4,000 = .045 × $4,000 = $180

Remember: 4.5% is the same as the decimal number .045

5. George works for a garden center where he is paid a salary of $350 per week plus a commission of 6%

of the amount of merchandise that he sells. Last week his sales totaled $1,850. What was his gross

pay?

SOLUTION: Commission: 6% of $1850 = $111

Salary: $350

Gross Pay: $350 + $111 = $461

6. Maria works at Tolbert’s Machine Shop and was just notified that she will receive a 7% annual raise.

She was making $28,500 per year. How much is her raise?

SOLUTION: 7% of $28,500 = .07 × $28,500 = $1,995

B. Solve the following more complex word problems about gross pay, net pay, and deductions.

7. Financial planners recommend that families save about 5% of their take-home pay. Ed and Sherrie

save $90 each week from their combined paychecks, which total $1200. What percent do Ed and

Sherrie save?

SOLUTION: Mathematically the question is: What percent of $1200 is $90?

Expressed as an equation: N% of 1200 = 90

Solve for N by dividing both sides of the equation by 1200:

N = 90/1200 = .075 = 7.5%

Remember: .075 is equal to 7.5%

Ed and Sherrie save 7.5% of their combined paychecks.

8. Each week, $88 is deducted from Richard’s paycheck for taxes. If his salary is $400 a week, what

percent of his pay is deducted? What is Richard’s net pay after the taxes are deducted?

SOLUTION: The problem asks you to answer two questions ... take them one at a time!

Question 1 asks what percent of Richard’s pay is deducted for taxes. Stated

mathematically: What percent of $400 is $88?

Expressed as an equation: N% of 400 = 88 or N × 400 = 88

Solve for N by dividing both sides of the equation by 400:

N = 88/400 = .22 = 22%

So 22% is deducted from Richard’s paycheck for taxes.

Question 2 asks what Richard’s net pay is after taxes are deducted ... that’s easy!

Just subtract $88 from $400:

$400 –$88 = $312

$312 is Richard’s net pay after deducting the taxes.

Although at first glance this problem might seem complex, by breaking it down into

what is being asked and what information is necessary to answer each of the questions,

it becomes much more doable!

C. Answer questions 9 – 11 using the following information. The questions are multiple choice, circle the

correct response.

Andy earns $1,995.75 per month. The table below shows the federal and state deductions that are subtracted

from Andy’s monthly paycheck.

FEDERAL DEDUCTIONS

Federal Income Tax $221.65

Social Security Tax $123.74

Medicare Tax $28.94

STATE DEDUCTIONS

State Income Tax $35.00

State Unemployment Insurance and State Disability Insurance $20.50

9. What is the total amount of federal deductions from Andy’s paycheck?

a. $345.39

b. $374.33

c. $409.33

d. $429.83

Solution: Add the Federal Income Tax, Social Security Tax, and Medicare

Tax to calculate Andy’s Federal deductions.

$221.65 + $123.74 + $28.94 = $374.33

10. After all the federal and state deductions are taken out, Andy’s net monthly income is:

a. $1,940.23

b. $1,774.10

c. $1,621.42

d. $1,565.92

Solution: Add the Federal and State deductions; then subtract the total

from his gross pay.

Federal & State Deductions:

$221.65 + $123.74 + $28.94 + $35 + $20.50 = $429.83

Gross Pay – Federal & State Deductions = Net Pay

$1,995.75 – $429.83 = $1,565.92

11. Andy is considering paying 1% of his monthly gross income for extra health coverage. How much

would this additional coverage cost per month?

a. $19.96

b. $15.66

c. $1.57

d. $1.99

Solution: Mathematically the question is: What is 1% of $1,995.75?

Expressed as an equation: N = 1% of $1,995.75

Since 1% is equivalent to the decimal number .01, the equation becomes:

N = .01 × 1,995.75 = 19.9575 or $19.96

D. This section is a set of items based on a scenario. Read the scenario and answer questions 12 – 15.

You are in college. Finally you are free and on your own, however you recognize that you need some extra money and have decided you need to get a part-time job. You want a job where you can make tips and have flexible hours ... working at a restaurant would fit those requirements. Even though you don’t have any restaurant experience, you have a good resume and interviewed well. You emphasized that you are very dependable and have a good attitude. You got a job bussing tables!

Now you need to figure out how much money you will be making.

12. You are making $7.90 an hour. You will be working 20 hours per week, Thursday – Sunday, 5 hours each day. What is your gross pay for one week?

SOLUTION: $7.90 × 20 hours = $158.00

Your gross pay for one week is $158.00.

13. You figured out your gross pay, but you really want to know how much money you will be taking home – which is your net pay. You were informed at your orientation that deductions include federal taxes (15%), Social Security (6%), and Medicare (1.65%). What is your net pay for one week?

SOLUTION: To determine your net pay:

Calculate your gross pay and each of the deductions:

Gross Pay: $7.90 X 20 hours = $158.00

Federal Taxes: 15% of $158 = .15 × $158 = $23.70

Social Security: 6% of $158 = .06 × $158 = $9.48

Medicare: 1.65% of $158 = .0165 × $158 = $2.61

Subtract the sum of all the deductions from gross pay to determine your net pay:

Total Deductions: $23.70 + 9.48 + $2.61 = $35.79

Net Pay: $158.00 - $35.79 = $122.21

Your net pay for one week is $122.21

14. You got your first paycheck and you were excited to see that it was more than you thought! You forgot to figure in tips. As a busser, your employer adds 5% for tips to your gross pay as income. With tips, how much is your net pay?

SOLUTION: Your gross pay is your hourly wage plus 5% for tips:

Gross Pay: $7.90 X 20 hours = $158.00

5% of $158 = .05 × $158 = $7.90

$158 + $7.90 = $165.90

Calculate the deductions:

Federal Taxes: 15% of $165.90 = .15 × $165.90 = $24.89

Social Security: 6% of $165.90 = .06 × $165.90 = $9.95

Medicare: 1.65% of $165.90 = .0165 × $165.90 = $2.74

Total the deductions: $24.89 + $9.95 + $2.74 = $37.58

To determine net pay, subtract the total deductions from the gross pay:

$165.90 - $37.58 = $128.32

Your net pay is $128.32

15. You have now been at this job for 1 year and decided to ask your supervisor for a raise. You pointed out that you have never missed a day of work, you stayed late 8 times when extra help was needed, and came in 5 times to fill in when others called in sick. You asked for a raise of 50 cents per hour and got it! What is your new gross pay for one week including your 5% tips?

SOLUTION: Your new hourly rate is $7.90 + .50 = $8.40 per hour

Gross Pay:

$8.40 X 20 hours = $168.00

5% of $168 = .05 × $168 = $8.40

$168 + $8.40 = $176.40

Your new gross pay is $176.40

My Paycheck - CTECS · Check your work by referring to the My Paycheck Key. ... FEDERAL DEDUCTIONS...

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