September 7, 2011Objective: Students will identify how to calculate gross pay and net pay.

Discussion

•What’s the most important part of working?

• Does anyone know the term Gross Pay?

•What about Net Pay?

Terms

• Gross Pay: The total of an employee’s regular pay including allowances, overtime pay, commissions, and bonuses, and any other amounts, before deductions are made.

• Net Pay: The portion of a salary or wages that an employee actually gets (take home) after paying all deductions and taxes.

• Tax: Compulsory monetary contribution imposed by the government on activities of enjoyment, expenditure, income, occupation, privilege, property, etc. on individuals and organizations.

Gross vs. Net Pay

• Many businesses, forms, applications will want to know you GROSS PAY.

• In addition, your employer will tell you how much you will be paid as a GROSS salary figure but most people are more concerned with their NET salary… so how can you calculate your NET salary???

Gross Pay

Gross Pay:

$31,200 a year =

$600 a week =

$15 an hour… how to calculate?

Other known numbers are:

generally 40 hours per week

52 weeks per year

2080 (40 x 52)

(if the 40 hours per week varies then the rest of the calculations must also vary)

Try these calculations in your notebook

So try to calculate…• $16 an hour… how much per year?• $60,000 a year… how much per hour?• $500 a week… how much per hour?• $100,000 a year… how much per week?• $20 an hour… how much per week?• $300 a week… how much per year?• $16 an hour, working 50 hours a week… how

much per year?

Answers

• $16 an hour x 2080 = $33,280 per year• $60,000 a year / 2080 = $28.84 per hour• $500 a week / 40 = $12.50 per hour• $100,000 a year / 52= $1,923 per week• $20 an hour x 40 = $800 per week• $300 a week x 52 = $15,600 per year• $16 an hour, working 50 hours a week = • 16 x 40 = 640• (16 x 1.5) x 10 = 240 why? • (640 + 240) x 52 = $45,760 per year

Calculating Net Pay… not so easy

• What’s removed from your Gross Pay before you get Net Pay, we’ll discuss more tomorrow!• Income Tax: based on a government schedule based on Gross

Pay and the number of family members claimed. • Social Security Tax: 6.2% of Gross Pay• Medicare Tax: 1.45% of Gross Pay• Other Optional Deductions can include… Health Insurance,

Retirement, Charitable Donations, Pre-tax spending accounts, etc.

• Online calculator: http://www.paycheckcity.com/cokronos/netpaycalculator.asp

Conclusion

• What was our objective for today?

• Homework… for tomorrow complete the worksheet on calculating Gross Pay.