PlanetPaycheck
Welcome to PlanetPaycheck!
While visiting Planet Paycheck the vast world of a paycheck will be explored.
So, you are thinking about getting a job. What would you do with the money youearned?
Starting a newjob
- Taxes — required citizen charges bylocal,What services have you usedtodaystate, and federal governments. Themoney provided by taxes?
such as police, fire and emergencyservices,schools, and roads. Approximately 30% of every paycheck goes to taxes.
- Form W-4 — also known as an Employee’s Withholding Allowance Certificate. The information providedon this form determines the percentage of gross income to be withheld fortaxes.
- Form I-9 — also known as the Employment Eligibility Verification Form. It is used to verify the eligibilityofindividuals and to avoid hiring non-United States citizens. Employees must provide a driver’s license,passport,Social Security card or birth certificate to prove theiridentity.
- Form W-2 — also known as a Wage and Tax Statement. It states the amount of money earned andtaxes paid throughout the previous year. The Form W-2 is used to filetaxes.
PayingEmployees
1.Paycheck — The employer physically providesthe employee with his/her paycheck: money given toan employee for work completed. The paycheck stubis attached to the paycheck to show thepayroll withholdings. The employee is responsible forhandlingthepaycheck.
2.Direct Deposit — Employers directly depositthe employee’s paycheck into his/her authorizedbankaccount. On payday, the employee receives apaycheck stub detailing the payroll withholdings.
3.Payroll Card — This is the newest method. Apayrollcard is issued to the employee through theemployer and it electronically carries the balance ofthe employee’s net income.
A payroll card looks like a debit cardand electronically holds an employee’s paycheck. Do you think you would like or dislike this formof payment? Why?
TerrificTacos
Employee
Smith,SamA
SSN/EmployeeIdentificationNumber201-92-4856
Check#164
Check Amount (netpay)
$146.68G
EmployeeAddress293 MichaelGrove
PayType-Gross
WithholdingsCurrentYear-to-date
E
$180.00
C
FederalWithholding
StateWithholdingFICA
$14.10
$5.45
$13.77F
$296.10
$130.80
$330.48
Totals$33.32D$757.38IPay Period 6/11/2007 —6/25/2007 B
Reading your paycheckStub
A typical paycheck has two parts: the actual check and a paycheck stub. A paycheck stub lists thepaycheck
2.13.1.F1
deductions as well as other important information including the terms described below. Refer to theTerrificTacos paycheck stub on page 2 to answer the followingquestions.
A.Personal Information — States the employee’s name, address, and social securitynumber.
What is the name of theemployee?
B.PayPeriod—Thelengthoftimeforwhichanemployee’swagesarecalculated:usuallyweekly,bi-weekly,twicea month, ormonthly.
How long is the payperiod?
C.Gross Income — The total amount of money earned during the pay period before payrollwithholdings.
What is the gross income?
D.Payroll Withholdings — The amount of money subtracted from the gross income for taxes.Required
Whatisthetotalamountofpayrollwithholdings?
E.WithholdingTax—Theamountrequiredbylawforemployerstowithholdfromearnedwagestopaytaxes.On a paycheck stub, these are separated into two different withholding categories including federal andstate.
Theamountwithhelddependsontwothings:theamountofmoneyearnedand/ortheinformationprovidedon the FormW-4.
Whatisthesumwithheldforfederalandstatewithholdings?
F.FICA — (Federal Insurance Contribution Act) — This tax includes two separatetaxes:
FedOASDI/EE(FederalOldAgeSurvivorsDisabilityInsuranceEmployeeEmploymentTax)orSocial
Security — The nation’s retirement program. This tax helps provide retirement income for the elderlyand pays disabilitybenefits.
FedMED/EE(FederalMedicareEmployeeEmploymentTax)orMedicare— The nation’s health careprogram for the elderly and disabled. This tax provides hospital and medical insurance to thosewho
What is the amount for FICA?
G.Net Income — The amount of money left after all payroll withholdings have been taken fromthe What is the net income? (Gross income - Payroll Withholdings = NetIncome)
H.Year-to-Date — Totals of all the deductions which have been withheld from an individual’s paycheckfrom January 1 to the last day of the pay period indicated on the paycheckstub.
How much money has been taken out this year?