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Do Now…

Do Now…. Carl worked 12 hours for an hourly rate of $7.50 The Federal Tax Rate is 20% The State Tax Rate is 10% FICA is always 7.65% What is Carl’s Net Pay?. Computer Whiz Carl works at Circuit City. I think I know, check my answer. Click here is your answer was correct.

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Do Now…

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  1. Do Now… • Carl worked 12 hours for an hourly rate of $7.50 • The Federal Tax Rate is 20% • The State Tax Rate is 10% • FICA is always 7.65% • What is Carl’s Net Pay? Computer Whiz Carl works at Circuit City. I think I know, check my answer

  2. Click here is your answer was correct. Oops, I guess I need help. Click here. Carl’s Net Pay is $56.11

  3. Carl’s Net Pay • Carl’s Gross Pay is $90.00 • $7.5 x 12 hours = $90.00 • His Federal Tax Deduction is $18.00 • $90.00 x 20% = $18.00 • His State Tax Deduction is $9.00 • $90.00 x 10% = $9.00 • His FICA Deduction is $6.89 • $90.00 x 7.65% = $6.89 $90.00 - $18.00 - $9.00 - $6.89 = $56.11 Carl’s Net Pay is $56.11

  4. Money subtracted from your gross pay for taxes by the government, also called payroll taxes: • Federal Taxes • State Taxes • FICA (Social Security and Medicare) REQUIRED DEDUCTIONS

  5. NEXT • Johnny’s Gross Pay is $50.00 • Johnny’s Federal Tax Rate is 20% • Johnny’s Federal Tax Deduction is $10.00 Calculating Federal Tax Deduction $50.00 x 20% = $10.00 $50.00 x .20 = $10.00 Gross Pay x Federal Tax Rate = Federal Tax Deduction

  6. I think I know, check my answer The Federal Tax Rate is 20% Diligent David’s Gross Pay is $48.00 What is David’s Federal Tax Deduction? Show me how to determine David’s federal tax deduction

  7. Click here is your answer was correct. Oops, I guess I need help. Click here. David’s Federal Tax Deduction is $9.60

  8. 20% or .20 means 20¢ out of every dollar earned, goes to Uncle Sam. } 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢ $9.60 There are additional deductions to be subtracted from gross pay, let’s calculate State Taxes and FICA…

  9. STATE TAXES REQUIRED DEDUCTIONS • The amount subtracted from gross pay for taxes is determined by the state government. • It is a percentage of gross pay based on a person’s total wages and living situation (married, single, children, etc.). • The state tax deduction is calculated by multiplying the government determined tax rate by gross pay.

  10. NEXT Calculating State Tax Deduction • Johnny’s Gross Pay is $50.00 • Johnny’s State Tax Rate is 15% • Johnny’s State Tax Deduction is $7.50 $50.00 x 15% = $7.50 $50.00 x .15 = $7.50 Gross Pay x State Tax Rate = State Tax Deduction

  11. The State Tax Rate is 18% Diligent David’s Gross Pay is $48.00 What is David’s State Tax Deduction? I think I know, check my answer Show me how to determine David’s state tax deduction

  12. Click here is your answer was correct. Oops, I guess I need help. Click here. David’s State Tax Deduction is $8.64

  13. 18% or .18 means 18¢ out of every dollar earned, goes to Uncle Sam. } $48.00 x 18% OR $48.00 x .18 $8.64 There is one more deduction to be subtracted from gross pay, let’s learn about FICA…

  14. FICA REQUIRED DEDUCTIONS • FICA stands for Federal Insurance Contributions Act. This law was created to pay for Social Security and Medicare. • Social Security – Wages paid to retired people by the government based on how much they earned during their working years. • Medicare – Government sponsored health insurance for retired people. The amount subtracted from gross pay for FICA is always at a rate of 7.65% (6.2% for Social Security and 1.45% for Medicare)

  15. Calculating FICA Deduction • Johnny’s Gross Pay is $50.00 • The FICA Rate is 7.65% • Johnny’s FICA Deduction is $3.83 $50.00 x 7.65% = $3.83 $50.00 x .0765 = $3.83 Gross Pay x FICA Percentage = FICA Deduction

  16. Diligent David’s Gross Pay is $48.00 What is David’s FICA Deduction? I think I know, check my answer Show me how to determine David’s FICA deduction

  17. Click here is your answer was correct. Oops, I guess I need help. Click here. $3.67 David’s FICA Deduction is After all these deductions, is there any money left for me?

  18. $48.00 x 7.65% = $3.67 $48.00 x .0765 = $3.67

  19. After all these deductions, is there any money left for me? NET PAY = the money left after all deductions are subtracted from gross pay.

  20. Calculating Net Pay: the money after deductions, what you actually bring home….. • Johnny’s Gross Pay is $50.00 • Johnny’s Federal Tax Deduction is $10.00 • Johnny’s State Tax Deduction is $7.50 • Johnny’s FICA Deduction is $3.83 $50.00 - $10.00 - $7.50 - $3.83 = $28.67 Gross Pay - Federal, State and FICA Deductions = Net Pay

  21. What is Diligent David’s Net Pay? • His Gross Pay is $48.00 • His Federal Tax Deduction is $9.60 • His State Tax Deduction is $8.64 • His FICA Deduction is $3.67 I think I know, check my answer Show me how to determine David’s Net Pay

  22. Click here is your answer was correct. Oops, I guess I need help. Click here. David’s Net Pay is $26.09 He will have $26.09 to spend after all required deductions have been subtracted from his gross pay.

  23. NEXT David’s Net Pay • David’s Gross Pay is $48.00 • $8.00 x 6 hours = $48.00 • His Federal Tax Deduction is $9.60 • $48.00 x 20% = $9.60 • His State Tax Deduction is $8.64 • $48.00 x 18% = $8.64 • His FICA Deduction is $3.67 • $48.00 x 7.65% = $3.67

  24. Gross Pay - Federal Tax - State Tax - FICA = Net Pay $48.00 - $9.60 - $8.64 - $3.67 = $26.09 David’s Net Pay = $26.09

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