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Unit B: Career and Educational Exploration

Learn about different types of compensation for work, how to read a paycheck stub, and the basics of taxes and their deductions. Explore the benefits and fees associated with payroll cards.

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Unit B: Career and Educational Exploration

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  1. Unit B: Career and Educational Exploration Competency 4.0 Understand financial services and forms used in independent living.

  2. Essential Questions What are the ways in which an employee can be paid? What should employees know about employment and income tax forms?

  3. PAYDAY • Have you ever worked for pay? • Did you look forward to paydays? • Journal Entry: List words to describe you feelings on paydays.

  4. A Payday candy bar could serve as a symbol of monetary compensation for work. • Eat Now and enjoy • Trade for something else • Save for later • Give away • Enjoy the smell

  5. Types of Compensation for Work • Wage---an amount of money paid for a specified quantity of labor • Minimum wage---the lowest wage employers may legally pay workers • Salary-a set amount of income paid for a set period of time worked • Commission-income paid as a percentage of sales made by a salesperson • Tips-also known as gratuities-monies paid by customers to those who provide services • Bonus-money in addition to base pay, either as reward for performance or as share of profit

  6. Types of Compensation for Work Types of non-monetary compensation--- also known as benefits • Vacations, holidays and sick leave • Insurance • Savings/retirement plans • Education-related benefits---tuition, credits, job training • Family -related benefits---child care, maternity leave, adoption leave/support, family leave

  7. Read the ingredients list on the label. • Just as each candy slice contains some of each ingredient, so each paycheck contains specific kinds of information.

  8. Contents of paycheck stub • gross pay • net pay • hourly wage • hours worked • state/federal withholdings • Social Security income tax • employee’s name • Social Security number • total earned and withheld • year to date • last day of pay period

  9. Paychecks and Tax FormsTake Charge of your Finances Family Economics & Financial Education

  10. Taxes Taxes – Compulsory charges imposed on citizens by local, state, and federal governments. Used to provide public goods and services. Largest amount of taxes a person pays is on his/her income. Internal Revenue Service (IRS) – Collects federal taxes, issues regulations, and enforces tax laws written by the United States Congress.

  11. Where Does My Money Go? Almost 31% of an individual’s paycheck is deducted Taxes are the largest expense most individuals will have Therefore, it is important to understand the systematic deductions U.S. tax system operates on an ongoing payment system Taxes are immediately paid on income earned

  12. Paying Employees Three methods employers may use to pay employees: Paycheck – payment given with a paper check with a paycheck stub attached Most common method Employee responsible for handling the paycheck Immediately see payroll stub and deductions

  13. Paycheck Stub Paycheck Stub A document included each pay period which outlines paycheck deductions

  14. Paying Employees continued Direct Deposit - employers directly deposit employee’s paycheck into the authorized employee’s depository institution account Employee receives the paycheck stub detailing the paycheck deductions Most secure because there is no direct handling of the check Employee knows exactly when paycheck will be deposited and available

  15. Paying Employees continued Payroll Card - payment electronically loaded onto a plastic card Funds are directly deposited by an employer into an account at a depository institution that is linked to the payroll card Parties involved: Employer Employee Depository institution Use the payroll card for ATM withdrawals or to make purchases

  16. Payroll Card There are numerous fees associated with payroll cards Number of fees depends upon the depository institution Examples: Monthly or annual fee ATM fee Inactivity fee Fee after a specific number of transactions have been used Replacement fee if the card is lost, stolen , or destroyed Load fee (when funds are placed on the card account) Point of sale (POS) fee for using the card at a POS terminal, or an electronic payment processor

  17. Benefits of Using Payroll Cards Employers Lower internal costs Costs associated with producing, handling, and distributing pay checks is eliminated Depository Institutions Profit from the fees charged to employees, employers, and merchants Employees Safer than carrying large amounts of cash Unbanked employees do not have to pay check cashing fees Americans roughly spend $8 billion annually in check cashing fees Can access electronic monthly statement of transactions Can receive a second card Give allowances to children Send money internationally Easily make online purchases

  18. Consumer Protection with Payroll Cards Regulation E – Electronic Fund Transfer Act Protects payroll card holder from fraudulent charges on lost or stolen cards Card holder is only liable for $50 if a lost or stolen card is reported within 48 hours Over four million paychecks are stolen annually with no protection to employees Regulation E provides exceptional safety and protection for payroll card holders

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