Bell Ringer

1. Bell Ringer • What is gross pay?

2. Bell Ringer Answer • Your wages prior to taxes.

3. Agenda • Bell Ringer / Attendance • Income and taxes notes, discussion, and activity • W-4 and pay stub activity • Understanding taxes activity

4. Table of Contents Topic Page # Resume Notes 17 12/16 – 12/20 Bell Ringers 18 Cover Letter Notes 19 Interview Presentation Notes 20 Interview Presentation Notes 21 Thank You Letter Notes 23 Job Hazard Activity 24 Job Hazard Notes 25 Teen Safety Documentary Notes 26 Sexual Harassment Notes 27 JCPS Sexual Harassment Policies 28 Payroll and Income Notes 29 Understanding Taxes Questions 30

5. Income and Taxes Notes Notes Notes Notes 28 29

6. Understanding Taxes Questions 1. 2. 3. 4. 5. 6. 7. 8. 9. 30 31

7. Name Tent Directions • Fold the paper in half hamburger style. • Crease the center fold. • Open the paper. • Fold the bottom of the paper to middle crease. • Crease the fold. • Open the paper. • Fold the top of the paper to the middle crease. • Crease the fold. • The paper should now have 4 sections. • Starting from one end of the paper, count down 3 rectangles. Print your name in LARGE letters. • Turn the paper upside-down. Again count down 3 rectangles and print you name in LARGE letters. • Fold the paper to create a tent with the name displayed on both sides.

8. Groups • Group 1: • Remain seated, use only one hand, your non-dominant hand. • Group 2: • Remain seated, use only one hand, your dominant hand. • Group 3: • Remain seated, use both hands. • Group 4: • Stand, use only one hand, your non-dominant hand. • Group 5: • Stand, use only one hand, your dominant hand.

9. Group Times

10. Human Capital • Human Capital is the knowledge, talent, and skills that people possess. • You are able to invest in your human capital by going to school, pursing additional training and developing skills. • There is a very strong correlation between the level of human capital a person possesses and the amount of income a person earns. • What is your human capital?

11. Human Capital vs. Groups • Group 1  High school graduates • Group 2  Bachelors or Trade School degrees • Group 3  Advanced degrees (Master’s / Doctorate) • Group 4  High School Dropouts • Group 5  Associates Degree

13. Human Capital Stats According to the U.S. Census Bureau News, 2010: • Adults with advanced degrees earn four times more than high school dropouts. • Doctorate degree = $103,054 • Masters degree = $73,738 • Bachelors degree = $56,665 • Associates degree = $39,771 • High School diploma = $30,627 • High school dropout = $20,241 • 89% of all adults over the age of 25 reported that they had completed at least high school. • 33% percent of adults 25 years old and older had attained at least a bachelor’s degree.

14. Income and Wages • Income • The payment people receive for providing resources in the market. When people work, they provide human resources (labor) in exchange they receive income in the form of wages. • Wages • Wages are computed by multiplying an hourly pay rate by the numbers of hours worked. People also earn salaries for providing labor. Rather than an hourly scale, salaries are generally an annual amount paid monthly or bi-monthly for a specified number of hours.

15. John Dough’s Pay Stub • Reading John Dough’s Pay

16. Deductions: Taxes • Taxes are government fees on business and individual income, activities, products, and property. People are required to pay taxes. • The tax revenue collected is used to provide government goods and services for citizens and to allow the government to operate.

17. Deductions: Volunteer • People voluntarily have money deducted from their paychecks for expenses such as medical insurance or savings in retirement accounts.

18. Gross Pay vs. Net Pay • Gross Pay - amount people earn per pay period before any deductions or taxes are paid. • Net Pay - amount people receive after taxes and other deductions are taken out.

19. Income Tax • Income Tax is a tax on the amount of income people earn. People pay a percentage of their income in tax. People who earn more pay a higher percentage of their income tax. • EVERYONE PAYS A FEDERAL INCOME TAX.

20. Single Filing Status • 10% on taxable income from $0 to $8,925, plus • 15% on taxable income over $8,925 to $36,250, plus • 25% on taxable income over $36,250 to $87,850, plus • 28% on taxable income over $87,850 to $183,250, plus • 33% on taxable income over $183,250 to $398,350, plus • 35% on taxable income over $398,350 to $400,000, plus • 39.6% on taxable income over $400,000.

21. Married Filing Status • 10% on taxable income from $0 to $17,850, plus • 15% on taxable income over $17,850 to $72,500, plus • 25% on taxable income over $72,500 to $146,400, plus • 28% on taxable income over $146,400 to $223,050, plus • 33% on taxable income over $223,050 to $398,350, plus • 35% on taxable income over $398,350 to $450,000, plus • 39.6% on taxable income over $450,000.

22. Questions • What is the income tax amount for someone that is single and makes $42,000 a year? (25%) • What is the income tax amount for someone that is married and makes $20,000 a year? (15%)

23. So what does my Income Tax pay for? • National Defense • Interest on National Debt • Veterans’ Benefits • Education (FAFSA, Public schools, etc) • Law Enforcement • National Resources, Energy, and Environment • International Affairs • Science, Space, and Technology

24. State Income Tax • State Income Tax some states elect to take out a state income tax on top of the federal income tax. Kentucky employees are taxed a state income.

25. State Income Totals • Income range is between $0 and $3,000, tax rate is2%. • Income range is between $3,001 and $4,000, tax rate is3%. • Income range is between $4,001 and $5,000, tax rate is4%. • Income range is between $5,001 and $8,000, tax rate is5%. • income range is between $8,001 and $75,000, tax rate is5.8%. • Income range is $75,001 and over, tax rate is6%.

26. So what does my state tax pay for? • K – 12 Education • Higher Education • Public Assistance • Corrections • Transportations • Other

27. How much comes out?! • A W-4 Form is a federal form that you have to fill out at every job upon being hired. This form determines that amount of taxes that are withheld from your check.

28. W-4 Form • Required by the Internal Revenue Service (IRS) • Allows employers to determine what amount of income tax they should deduct from each employee’s paycheck based on that person’s situation, such as whether he/she is single, married, etc. • Even if you are a student, it isn’t likely that you are exempt from tax withholdings.

29. W-4 Form • Each April, you must file a federal income tax return with the IRS. If over the course of the year you paid more income tax than necessary, you will receive a tax refund from the federal government. • Employees are expected to complete a W-4 accurately and honestly when starting a new job or if their status changes in some way. • If you make a mistake on the form you could delay or prevent receipt of any tax refund you are owed.

30. W-4 Form • Reading John Dough’s W-4 Form

31. Questions about John’s W-4 • Why can’t John claim exempt status? • Why did John enter a ‘1’ on line B? • Why should John leave line E blank?

32. More Taxes • FICA – Federal Insurance Contributions ACT. FICA is another tax or required contribution that most workers and employers pay. • Some workers such as state government workers and teachers may not be required to pay FICA.

33. FICA • FICA is a US payroll tax used to fund social security and medicare. • Social Security is a federal program that provides benefits for retirees, the disabled and children of deceased workers • Medicare is a federal program that provides hospital insurance benefits • Employees pay part of FICA and the employers pay the other pay of FICA

34. FICA – Social Security • Total contributions for FICA is 6.2% for the employee. • Total contributions for FICA is 6.2% for the employer. • Self-employed people are responsible for the entire FICA percentage.

35. FICA - Medicare • Medicare is used to provide medical benefits for certain individuals when they reach 65.

36. Your Turn! • Complete the W-4 using the scenario about Angela at the top of the page. • Examine Angela’s pay stub to answer the 7 questions on the back of the page.