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Working and Earning Earning Statements

Working and Earning Earning Statements. Key Ideas Employment provides a means of creating personal income Employee earning statements include information about………………. gross wages, benefits, taxes and other deductions. Overview Information

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Working and Earning Earning Statements

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  1. Working and EarningEarning Statements • Key Ideas • Employment provides a means of creating personal income • Employee earning statements include information about………………. • gross wages, benefits, taxes and other deductions

  2. Overview Information • Employees are able to monitor their salaries through the information provided on their earning statements • provided each time an employee is paid (usually on a bi-weekly or monthly basis) • includes information about hours worked, gross vs. net income, deductions, etc.

  3. Gross vs. Net Income • “gross” income is…….. • the total amount of money an individual makes before deductions • “net” income is……… • the total amount of money that an employee actually gets after deductions • Net income is also called… • “Take Home Pay”

  4. Gross is usually reflected in a general salary or hourly figure • Pete earns a salary of $45,000/year • Sarah earns $13.50/hour • Neither or these employees “takes home” that full amount

  5. Deductions • Define…. • money that is taken out of an employees gross pay for different purposes • Examples…… • health insurance (medical, dental, vision) • retirement contributions • annuities/loan payments • garnishment (for unpaid child support, owed back taxes, etc.) • taxes - federal, state and local • Social Security, federal income, state income, local income

  6. Example: Pete earns a salary of $45,000/year and gets paid every 2 weeks. Then, money is deducted for • health insurance ($100/pay) • 401k (10% of gross) • Social Security (7% of gross) • federal income tax (20% of gross) • state income (4% of gross) • local income taxes (2% of gross)

  7. I HAVE NOT EATEN YET! $29,100 = 64.6 % of Gross Income

  8. Pay Check Deductions • Federal Income Tax 720 • State Income Tax 220 • City Income Tax 140 • Medicare 50 • STRS 700 • Health 120 • Dental 6 • Vision 1 • Union 15 • 403 B 200 • Savings 120 • ------------------------------------------------------------ • $2292 Not taxed on this income earned

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