What do you feel is the best part of beginning a new job?

1. What do you feel is the best part of beginning a new job? There are many different answers to this question: • Self satisfaction • Learning new skills • Change in routine However, many people will believe it is the PAYCHECK received from that job!

2. Family Economics & Financial Education The Essentials to Take Charge of Your Finances Understanding Your Paycheck Essentials- Advanced Level

3. What does an employee have to do before receiving a paycheck from a new job?

4. Form W-4Employee’s Withholding Allowance Certificate Determines the percentage of an employee’s pay that will be withheld for federal income taxes What are taxes? Taxes- Compulsory charges imposed on citizens by local, state, and federal governments

5. Taxes Provide public goods and services What is an item or service that you use every day that is paid for by taxes? • Citizens pay many different types of taxes in many different ways • Income tax, sales tax, property tax • Largest amount of taxes is paid on income

6. Income Taxes

7. Allowances • Used to determine the amount of federal taxes withheld from the paycheck • A person may claim a personal allowance if no one else claims the person as a dependent • Dependent – a person who relies on the taxpayer for financial support

8. Form I-9Employment Eligibility Verification Form Verifies the eligibility of individuals to avoid hiring undocumented workers or others who are not eligible to work in the United States

9. What are methods employers can use to pay employees? Will discuss the following methods: • Paper Paycheck • Direct Deposit • Payroll Card An employer may offer only one or all of these payment options to their employees.

10. What is a Paper Paycheck? Paper Paycheck – payment given with a paper check with a paycheck stub attached Paycheck stub– lists important information about the paycheck and outlines the deductions made • Least secure • Employee is completely responsible for paycheck • Increased chance of the paycheck getting lost • The cost for employers to print paychecks is greater compared to direct deposit • Most common • Employee may choose what action to do with the paycheck • Deductions are clearly identified on the paycheck stub attached

11. What is Direct Deposit? Direct Deposit - employers directly deposit employee’s paycheck into the authorized employee’s depository institution account • Employee receives a paycheck stub • Increased security and convenience for employee • Employee knows exactly when paycheck will be deposited • Employee can view their paycheck stub to see what deductions have been taken • Employees must use a depository institution for this method to be available

12. What is a Payroll Card? Payroll Card - payment electronically loaded onto a plastic card • Funds are automatically deducted from the balance of a payroll card when a purchase is made • Can be used for ATM withdrawals or to make purchases • Employee will receive some type of paycheck stub (may be electronic) • There can be numerous fees associated with payroll cards • Safer than carrying large amount of cash • Can review paycheck stub • Employees must be careful of fees charged by payroll cards

13. Receiving a Paycheck Which payment method would work best for you?

14. Reading a Paycheck Stub Why is it important to understand how to read a paycheck stub?

15. Personal Information • States the employee’s full name, address, and Social Security or Employee Identification number • Always check to ensure this information is correct

16. Pay Period • The last day of the pay period is not always payday to allow a business to accurately compute wages

17. Gross Income • The total amount of money earned during a pay period before deductions

18. Net Income • The amount of money left after all deductions have been withheld from the gross pay earned in the pay period

19. Payroll Withholdings • The amount of money subtracted or deducted from the gross pay earned • Mandatory deductions to pay taxes • Optional deductions to pay employee sponsored medical benefits, and/or retirement benefits

20. Federal Withholding Tax • The amount required by law for employers to withhold from earned wages to pay federal income taxes • Largest deduction withheld from an employee’s gross income

21. State Withholding Tax • The percentage deducted from an individual’s paycheck to assist in funding government agencies within the state (not all states have state income tax) • The percentage deducted depends on the amount of gross pay earned

22. FICA (Federal Insurance Contribution Act) • This tax includes two separate taxes: Fed OASDI/EE or Social Security and Fed MED/EE or Medicare • These two taxes can be combined as one line item or itemized separately on a paycheck stub

23. Social Security • Nation’s retirement program, helps provide retirement income for elderly and pays disability benefits • Based upon a percentage (6.2%) of gross income, employer matches the contribution made by the employee

24. Medicare • Nation’s health care program for the elderly and disabled, provides hospital and medical insurance to those who qualify • Based upon a percentage (1.45%) of gross income

25. Retirement Plan • Optional deduction • The amount an employee contributes each pay period to a retirement plan • A specified percentage of the contribution is often matched by the employer

26. Medical • Optional deduction • The amount taken from the employee’s paycheck for employer-sponsored medical benefits

27. Year-to-Date • Total of all of the deductions which have been withheld from an individual’s paycheck from January 1 to the last day of the pay period indicated on the paycheck stub

28. Summary What is the process to obtain a paycheck?