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Payroll Taxes

Payroll Taxes. Employees pay them every time they get paid. (2014 version). (about 120 slides). First, though…. Gross Pay. Gross Pay. The amount of money you earned. Gross Pay. The amount of money you earned. $9 per hour  6 hours = ?. Gross Pay. The amount of money you earned.

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Payroll Taxes

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  1. Payroll Taxes Employees pay them every time they get paid. (2014 version) (about 120 slides)

  2. First, though…

  3. Gross Pay

  4. Gross Pay The amount of money you earned

  5. Gross Pay The amount of money you earned $9 per hour  6 hours = ?

  6. Gross Pay The amount of money you earned $9 per hour  6 hours = ? $9 per hour  6 hours = $54

  7. Gross Pay The amount of money you earned $9 per hour  6 hours = ? $9 per hour  6 hours = $54

  8. Gross Pay The amount of money you earned $15 per lawn  4 lawns = ?

  9. Gross Pay The amount of money you earned $15 per lawn  4 lawns = ? $15 per lawn  4 lawns = $60

  10. Gross Pay The amount of money you earned $15 per lawn  4 lawns = ? $15 per lawn  4 lawns = $60

  11. What’s the Gross Pay? • $20 per hour, 20 hours = • $4 per toy, 20 toys = • $11 per hour, 40 hours = • $12 per hour, 15 hours =

  12. What’s the Gross Pay? • $20 per hour, 20 hours = $400 • $4 per toy, 20 toys = • $11 per hour, 40 hours = • $12 per hour, 15 hours =

  13. What’s the Gross Pay? • $20 per hour, 20 hours = $400 • $4 per toy, 20 toys = $80 • $11 per hour, 40 hours = • $12 per hour, 15 hours =

  14. What’s the Gross Pay? • $20 per hour, 20 hours = $400 • $4 per toy, 20 toys = $80 • $11 per hour, 40 hours = $440 • $12 per hour, 15 hours =

  15. What’s the Gross Pay? • $20 per hour, 20 hours = $400 • $4 per toy, 20 toys = $80 • $11 per hour, 40 hours = $440 • $12 per hour, 15 hours = $180

  16. Gross Pay - Payroll Taxes = Net Pay

  17. Worked 10 hours for $10 an hour

  18. Worked 10 hours for $10 an hour 10  $10 = $100 Pay you earned (Gross Pay):

  19. Worked 10 hours for $10 an hour Pay you earned (Gross Pay):

  20. Worked 10 hours for $10 an hour Pay you earned (Gross Pay): Pay left over (Net Pay):

  21. Worked 10 hours for $10 an hour Pay you earned (Gross Pay): Pay left over (Net Pay):

  22. Worked 10 hours for $10 an hour Pay you earned (Gross Pay): Pay left over (Net Pay): $79.15

  23. Worked 10 hours for $10 an hour Pay you earned (Gross Pay): Pay left over (Net Pay): $79.15 Net Pay (after taxes)

  24. Gross Pay - Payroll Taxes = Net Pay

  25. Californian employees pay 5 payroll taxes • Federal Income Tax • FICA—Medicare Tax • FICA—Social Security Tax • State Income Tax • State Disability Insurance (SDI)

  26. Californian employees pay 5 payroll taxes • Federal Income Tax • FICA—Medicare Tax • FICA—Social Security Tax • State Income Tax • State Disability Insurance (SDI)

  27. Californian employees pay 5 payroll taxes • Federal Income Tax • FICA—Medicare Tax • FICA—Social Security Tax • State Income Tax • State Disability Insurance (SDI) Federal Taxes

  28. Californian employees pay 5 payroll taxes • Federal Income Tax • FICA—Medicare Tax • FICA—Social Security Tax • State Income Tax • State Disability Insurance (SDI) Federal Taxes

  29. Californian employees pay 5 payroll taxes • Federal Income Tax • FICA—Medicare Tax • FICA—Social Security Tax • State Income Tax • State Disability Insurance (SDI) Federal Taxes State Taxes

  30. Let’s go through the 5 payroll taxes in this order: • FICA—Medicare Tax • FICA—Social Security Tax • State Disability Insurance (SDI) • Federal Income Tax • State Income Tax

  31. FICA—Medicare Tax

  32. FICA—Medicare Tax This tax money is used by old people for their health care. Hospital stays, doctor’s appointments, lab tests, wheelchairs, walkers, etc. FICA stands for “Federal Insurance Contributions Act”

  33. Medicare Tax

  34. FICA—Medicare Tax Proportional Tax • everyone pays the same rate, regardless of income

  35. FICA—Medicare 1.45% on all wages

  36. FICA—Medicare 1.45% on all wages Earned $630 this week:

  37. FICA—Medicare 1.45% on all wages Earned $630 this week: $630 x 1.45% = $9.14

  38. How to calculate payroll taxes Medicare tax = (Gross Pay)  1.45%

  39. FICA—Social Security Tax

  40. FICA—Social Security Tax This tax money is used by old people for anything they want. It is their retirement money.

  41. FICA—Social Security Tax Regressive Tax • the rate of tax decreases with income

  42. FICA—Social Security Tax Regressive Tax • the rate of tax decreases with income • Social Security Tax has a tax base Once you earn more than the tax base, you don’t have to pay the tax anymore.

  43. FICA—Social Security 6.20% on first $117,000 earned in a year 0% on income over $117,000 accumulated income 6.20% 2014 rate

  44. FICA—Social Security 6.20% on first $117,000 earned in a year Earned $630 this week:

  45. FICA—Social Security 6.20% on first $117,000 earned in a year Earned $630 this week: $630 x 6.20% = $39.06

  46. How to calculate payroll taxes Medicare tax = (Gross Pay)  1.45% Social Security tax = (Gross Pay)  6.20%

  47. State Disability Insurance Tax

  48. State Disability Insurance (SDI) This tax money is used by people hurt away from work who need temporary help with living expenses.

  49. State Disability Insurance Tax

  50. State Disability Insurance (SDI) Regressive Tax • the rate of tax decreases with income

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