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The truth about your paycheck

The truth about your paycheck. Gross vs Net Pay. Taxes. Federal 10 or 15% ( details ) Social Security 6.2% (up to $7,049.40) Maxes out when earning read $113,700 in 2013 Medicare 1.45% State 3.07% Local 1% Taken once each year County taxes Emergency taxes. After-tax deductions.

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The truth about your paycheck

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  1. The truth about your paycheck Gross vs Net Pay

  2. Taxes • Federal 10 or 15% (details) • Social Security 6.2% (up to $7,049.40) • Maxes out when earning read $113,700 in 2013 • Medicare 1.45% • State 3.07% • Local 1% • Taken once each year • County taxes • Emergency taxes

  3. After-tax deductions Taxes are deducted from the contribution amount • Union Dues • Unemployment .06% (up to $500) • Disability (not in PA) • Purchase vacation time

  4. Before-tax deductions No federal and sometimes no state taxes are paid for the contribution amount • Flexible spending accounts • Pay for medical expenses or childcare • Use it or lose it) • Health Insurance Contribution • Savings Plans • 401(k) from for-profit businesses • 403(B) from non-profit businesses • 529 account for education • Matching funds

  5. How do you figure it? • You work 30 hours at $7.25/hour. • You earn: $217.50 • Subtract • Federal tax: $217.50 x 15% = 32.63 184.87 • Social Sec: $217.50 x 6.2% = 13.49 171.38 • Medicare: $217.50 x 1.45% = 3.15 168.23 • State tax: $217.50 x 3.07% = 6.68 161.55 • Local taxes: $217.50 x 1% = 2.18 159.37

  6. How do you figure it? • You work 40 hours at $15/hour. • You earn: $600 • Subtract • Federal tax: $600 x 15% = 90.00 510.00 • Social Sec: $600 x 6.2% = 37.20 472.80 • Medicare: $600 x 1.45% = 8.70 464.10 • State tax: $600 x 3.07% = 18.42 445.68 • Local taxes: $600 x 1% = 6.00 439.68

  7. Deductions • Earnings $ 439.68 • Union Dues $20/week 419.68 • Health Insurance $50/week 369.68 So, starting with $600 a week, your actual take home, or net pay, after taxes but before savings, is $369.68. That’s 62%.

  8. So, starting with $600 a week, your actual take home, or net pay, after taxes but before savings, is $369.68. That’s 62%.

  9. Playing with the Numbers • Using Excel, we’re going to experiment with numbers and see how formulas can do the work for you.

  10. Assignment • Complete the Calculating Taxes and Net Pay assignment. Hand it in before you leave today.

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