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Social Security & medicare

Social Security & medicare. Gross Pay vs Net Pay. Gross Pay → What your total pay is before deductions Net Pay → The amount your paycheck is for → Also known as your “take home pay” Net Pay = Gross Pay - Deductions. Deductions. For each paycheck, you can have several deductions:

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Social Security & medicare

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  1. Social Security & medicare

  2. Gross Pay vs Net Pay • Gross Pay → What your total pay is before deductions • Net Pay → The amount your paycheck is for → Also known as your “take home pay” • Net Pay = Gross Pay - Deductions

  3. Deductions • For each paycheck, you can have several deductions: • Social Security • Medicare • Tax Withholdings • Retirement Plans • Union Dues • Many More

  4. Social Security • Retirement benefits for people who are at least 62 • Disability benefits for workers who are disabled or unable to work • Survivors’ benefits, paid to spouses and dependent children when a social security recipient dies • Originated in 1935 at 1% • Current rate is 6.2%

  5. Medicare • Medical insurance for some disabled people and people over 65 • Originated in 1966 at 0.35% • Current rate is 1.45% • Both Social Security and Medicare were established in the Federal Insurance Contribution Act • FICA

  6. Social Security & Medicare • Social Security • Currently pay 6.2% of taxable income to S.S. • Maximum taxable income of $106,800 • Increasing to $110,100 next year • What is the most you could pay in Social Security Tax in one year?

  7. Social Security & Medicare • Medicare • Currently pay 1.45% of taxable income to Medicare • No maximum • What is the most you could pay in Medicare in one year?

  8. Example • Ramiro got his first job in 2006. In that year, Social Security tax was 6.2% of income up to $94,200. Medicare tax was 1.45%. If Ramiro earned $73,210 in 2006, how much did he pay in Social Security and Medicare? Social Security Medicare = 73,210 • 0.062 = 73,210 • 0.0145 = 4,539.02 = 1,061.545 Total Withholdings = 4,539.02 + 1,061.55 = 5,600.57

  9. Example • What are the social security and Medicare withholdings for an executive whose annual gross earnings are $98,430 in 2007, when the maximum taxable income was $97,500? Medicare Social Security = 98,430 • 0.0145 = 98,430 = 97,500 • 0.062 = 1,427.24 = 6,045 = 6,045 + 1,427.24 Total Withholdings = $7,472.24

  10. Social Security & Medicare • Social Security • Currently pay 6.2% of taxable income to S.S. • Maximum taxable income of $106,800 • Increasing to $110,100 next year • What is the most you could pay in Social Security Tax in one year?

  11. Social Security & Medicare • Medicare • Currently pay 1.45% of taxable income to Medicare • No maximum • What is the most you could pay in Medicare in one year?

  12. Example • You currently earn an annual salary of $247,500. You must pay a social security tax rate of 6.2% of taxable income up to $106,800. • What is your monthly salary? • What month will you reach the maximum taxable income? • How much will you pay in social security in February?

  13. Example • You currently earn an annual salary of $247,500. You must pay a social security tax rate of 6.2% of taxable income up to $106,800. • What is your monthly salary? • What month will you reach the maximum taxable income? • How much will you pay in social security in Nov.?

  14. Example • You currently earn an annual salary of $247,500. You must pay a social security tax rate of 6.2% of taxable income up to $106,800. • What is your monthly salary? • What month will you reach the maximum taxable income? • How much will you pay in social security in June?

  15. Social Security & Medicare • Page 319, 2-4

  16. Social Security & Medicare • Maximum you could pay into S. S. each year: $1,070.85 $1,587.67 $2,170.80 $2,532.60 $3,003.00 $3,379.50 $3,924.45

  17. Social Security & Medicare • In 1990, Jerry’s gross pay was $78,000. • What was his monthly gross pay? • In what month did he his the maximum? • How much did he pay in S.S. tax in Jan? • How much S.S. tax did he pay in Dec? $6,500 August $497.25 $0

  18. Social Security & Medicare • In 1978, Dawn earned $48,000. • What was her monthly gross pay? • In what month did she reach the maximum Social Security income? • How much S.S. tax did she pay in Feb? • How much S.S. tax did she pay in May? • How much S.S. did she pay in Nov.? $4,000 May $242 $102.85 $0

  19. Social Security & medicare

  20. Social Security & Medicare • Yesterday, we covered Social Security & Medicare • Social Security • Currently at 6.2% • Maximum taxable income of $106,800 • Pay a maximum of $6,621.60 • Medicare • Currently at 1.45% • No maximum taxable income

  21. Social Security & Medicare • How much would you have to currently earn to pay as much in Medicare as you do in Social Security?

  22. Social Security & Medicare • Today, we are going to create piecewise functions detailing Social Security & Medicare • Recall, a piecewise function looks like: 0.15 x when 0 ≤ x < 500 0.20 x when 500 ≤ x < 1500 C(x) = 0.22 x when 1500 ≤ x

  23. Social Security & Medicare • Creating a piecewise function: • Create an algebraic expression for S.S. (and Medicare if applicable) for income less than the maximum amount • Determine total amount possible to be paid into S.S. when maximum amount is hit

  24. Social Security & Medicare • Express the 2006 as a piecewise function: 2006: S.S. rate of 6.2% w/ max at $94,200 Medicare rate of 1.45% w/ no max

  25. Social Security & Medicare • Express the 1999 as a piecewise function: 1999: S.S. rate of 6.2% w/ max at $72,600 Med. rate of 1.45% w/ max no max

  26. Social Security & Medicare • Express the 2009 as a piecewise function: 2009: S.S. rate of 6.2% w/ max at $106,800 Med. rate of 1.45% w/ no max

  27. Social Security & medicare

  28. Social Security & Medicare • Stephanie was just hired at a new job making $135,000 a year. How much will she pay in FICA taxes in her first year?

  29. Social Security & Medicare • Stephanie was just hired at a new job making $135,000 a year. How much will she pay in FICA taxes in her first year? • In what month will she surpass the taxable income amount of $106,800 and how much will she pay in that month?

  30. Social Security & Medicare • In 2007, the Social Security tax rate was 6.2% with a maximum taxable income of $97,500 and the Medicare tax rate was 1.45%. Express this as a piecewise function.

  31. Social Security & Medicare • On Friday, we started working on the 6.5 worksheet. Finish this worksheet now.

  32. Social Security & Medicare 1. Dr. Gumman got his first job in 1990. In that year, the government took out 7.45% of each income for Social Security and Medicare, until a person made $51,300. If Dr. Gumman earned $31,340 in 1990, how much did he pay to Social Security and Medicare?

  33. Social Security & Medicare 2. Lauren earned a total of “d” dollars last year. The government took out 6.2% for Social Security and 1.45% for Medicare. Write an algebraic expression that represents what she paid to Social Security and Medicare combined.

  34. Social Security & Medicare 3. In 1978, the Social Security and Medicare tax rate combined was 6.05% up to $17,700 earned. • Express the Social Security tax as a piecewise function. • Ten years later, the percent had increased to 7.51% and the maximum taxable income had increased to $45,000. Express this as a piecewise function. • If a person earned $50,000 in 1978 and $50,000 in 1988, what was the difference in taxes paid?

  35. Social Security & Medicare 4. In 2010, the government took out 6.2% of earnings for Social Security to a maximum taxable income of $106,800. For Medicare, 1.45% of earnings was paid. How much money would someone have to have earned in 2010 so that their payments to Medicare were equal to their payments into Social Security?

  36. Social Security & Medicare 5. In 1998, Lisa earned $149,461.20. The Social Security maximum taxable income was $68,400, and the Social Security percent was 6.2%. • What was her monthly gross pay? • In what month did she hit the maximum? • How much S.S. tax did she pay in May? • How much S.S. tax did she pay in July? • How much S.S. tax did she pay in June?

  37. Social Security & Medicare 6. In 2010, for the first time since 2004 the maximum taxable income was not raised. Find the maximum a person could pay into Social Security in 2010. Rate of 6.2% w/ max income of $106,800.

  38. Social Security & Medicare 7. Let t(x) represent the total combined Social Security and Medicare taxes for the year 2007. If x represents the income, express this total as a piecewise function. 2007: S.S. = 6.2% max @ $97,500

  39. Social Security & Medicare 8. Mr. Jackson had 2 jobs in 2005. The first job, in which he earned $74,007, was from January to August, and the second job, in which he earned $35,311, was from August to the end of the year. At the first job, he earned $74,007. As a result, he paid too much Social Security tax. How much should be refunded?

  40. Social Security & Medicare 9. In 2009, Dr. Kirmser’s gross pay was $381,318.60. S.S. = 6.2% max @ $106,800 • What was her monthly gross pay? • In what month did she hit the maximum? • How much S.S. tax did she pay in Feb.? • How much S.S. tax did she pay in Sept.? • How much S.S. tax did she pay in April?

  41. Social Security & medicare

  42. Social Security & Medicare • So far, we have: • Calculated total FICA taxes • Determined when you over surpass the maximum taxable income • Created piecewise functions for FICA taxes • Today: • Graph these FICA taxes

  43. Social Security & Medicare • In 2006, the social security tax rate was 6.2% of income up to $94,200. Graph this function: • What units would make sense to label the x-axis (income)? • What units would make sense to label the y-axis (Social Security tax)?

  44. Social Security & Medicare

  45. Social Security & Medicare • In 1991, the Social Security tax rate was 6.2% on income up to $53,400. Create a piecewise function for this and graph the function.

  46. Social Security & Medicare 10. If x represents income, express the Social Security function s(x) for 2005 as a piecewise function. Maximum taxable income of $90,000 Social Security = 6.2%

  47. Social Security & Medicare b. Graph the Social Security function for 2005.

  48. Social Security & Medicare c. Find the coordinates of the cusp.

  49. Social Security & Medicare d. If x represents income, what is the Medicare function m(x) for 2005?

  50. Social Security & Medicare d. Graph the Medicare function for 2005 on the same axes as the Social Security function in part b.

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