getting paid lesson plan 2.3 - seps - home integration options active learning tool 3.0.50 tablet...

Page | 1 2.3.9

© Take Charge Today – August 2013 – Getting Paid Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

RECOMMENDED GRADE

LEVELS AVERAGE TIME TO COMPLETE

EACH LESSON PLAN IS DESIGNED AND CONTINUALLY

EVALUATED “BY EDUCATORS, FOR EDUCATORS.” THANK YOU

TO THE FOLLOWING EDUCATORS FOR DEVELOPING

COMPONENTS OF THIS LESSON PLAN.

10‐12

Anticipatory Set & Facilitation: 100 minutes

Conclusion/Assessment Options: 20‐60 minutes

Time does not include the vocabulary activity or potential modifications.

Amy Broekhuizen, Family and Consumer Sciences Educator, Kentwood, Michigan

Margie Chinadle, Family and Consumer Sciences Educator, Rudyard, Montana

Tracey Newman, Family and Consumer Sciences Educator, Ste. Genevieve, Missouri

Lisa Bender, Business Educator, Oakland, Maryland

NATIONAL STANDARDS LESSON PLAN OBJECTIVES

The curriculum is aligned to the following national standards: National Standards for Financial Literacy American Association of Family and Consumer

Sciences Council for Economic Education National Business Education National Jump$tart Coalition Common Core English Language Arts

Upon completion of this lesson, participants will be able to: Compare different methods of employee payment Analyze wage deductions Interpret a pay stub Explain how being employed provides additional

benefits to wages earned

MATERIALS

MATERIALS PROVIDED IN THIS LESSON PLAN

MATERIALS SPECIFIC TO THIS LESSON PLAN BUT

AVAILABLE AS A SEPARATE DOWNLOAD MATERIALS TO ACQUIRE SEPARATELY

DEPENDING ON OPTIONS TAUGHT

Getting Paid Math 2.3.9.A1 Getting Paid reinforcement

worksheet 2.3.9.A2 The Ways We Are Paid 2.3.9.A3 Getting Paid Vocabulary List

2.3.9.E1 Sample Pay Stub 2.3.9.E2 Getting Paid Information Sheet

2.3.9.F1 Getting Paid Note Taking Guide

2.3.9.L1

Getting Paid PowerPoint presentation 2.3.9.G1

Earning Unit Multiple Choice Test Bank and Answer Key 2.3.0.M1 & C1

Timing Device Large pieces of paper Markers Internet access Scratch paper Online Form W‐4 Chairs

RESOURCES

EXTERNAL RESOURCES

GETTING PAID Advanced Level

www.takechargetoday.arizona.edu

Page | 2 2.3.9


External resources referenced in this lesson plan: Big Bang Theory Episodes:

o www.cbs.com/shows/big_bang_theory o www.youtube.com o www.hulu.com

Minimum wage by state: www.dol.gov/whd/minwage/america.htm Form W‐4: www.irs.gov/pub/irs‐pdf/fw4.pdf

IRS Understanding Taxes Education website: http://apps.irs.gov/app/understandingTaxes/student/simulations.jsp Bankrate state tax rates: www.bankrate.com/finance/taxes/check‐taxes‐in‐your‐state.aspx Social Security and Medicare: www.socialsecurity.gov

IRS Filing Requirements for Most Taxpayers: www.irs.gov/publications/p501/ar01.html#en_US_2011_publink1000259853

Consumer Jungle: www.consumerjungle.org

TAKE CHARGE TODAY RESOURCES

Similar lesson plan at a different level: Planet Paycheck 1.3.4

Optional lesson plan resources: Taboo® Active Learning Tool 3.0.28 Technology Integration Options Active Learning Tool

3.0.50 Tablet Applications for the Personal Finance

Classroom Active Learning Tool 3.0.52 Money World Squares Active Learning Tool 3.0.11

CONTENT

EDUCATOR MATERIALS PARTICIPANT READING

Materials to support educators when preparing to teach this lesson plan are available on the Take Charge Today website.

Getting Paid Information Sheet 2.3.9.F1

OPTIONAL ADVANCE INSTRUCTION

This lesson is designed to be taught as a stand‐alone lesson. However, background content knowledge from the following lesson plans is directly related to this lesson and may be helpful for participants.

The Basics of Taxes 2.2.2 Lifelong Employment 2.3.7

LESSON FACILITATION

PREPARE

Visual indicators to help prepare the lesson INSTRUCT

Instructions to conduct the lesson facilitation CUSTOMIZE

Potential modifications to lesson facilitation

VOCABULARY ACTIVITY Activity that may be conducted before, during and/or after instruction depending upon the activity and needs of participants.

Taboo® Approximate time: Approximately 10 minutes before instruction and 30 minutes after instruction. Materials to prepare: Taboo® Active Learning Tool 3.0.28

o 1 set of Getting Paid Taboo Cards 3.0.28.H1 for every 5‐9 participants

http://takechargetoday.arizona.edu/lessonplans/technology-integration-options

http://takechargetoday.arizona.edu/lessonplans/tablet-applications-personal-finance-classroom

http://takechargetoday.arizona.edu/lessonplans/moneyworld-squares

https://takechargetoday.arizona.edu/lessonplans/taboo-active-learning-tool

https://takechargetoday.arizona.edu/lessonplans/basics-taxes

https://takechargetoday.arizona.edu/lessonplans/lifelong-employment


http://www.irs.gov/pub/irs-pdf/fw4.pdf

Page | 3 2.3.9


1 timer for every 5‐9 participants Before instruction: 1. Divide participants into teams of 2‐4. 2. Provide each team with a set of Getting Paid Taboo Cards 3.0.28.H1 from the

Taboo® Active Learning Tool 3.0.28 and a timer. 3. Evenly distribute the Getting Paid Taboo Cards 3.0.28.H1 among the groups. 4. Explain that the word at the top of the card is a vocabulary term and the

taboo words listed below are descriptors of the term. 5. On a separate sheet of paper, have participants write the definition for each

term in their own words by using the context clues from the taboo words listed on the card.

6. As a class, discuss the definitions created for each word. After instruction: 7. Conduct the Taboo® activity as instructed as a conclusion option.

ANTICIPATORY SET OPTIONS There are two anticipatory set options provided for this lesson. 1. Option 1: Word Cloud 2. Option 2: The Big Bang Theory

Option 1: Word Cloud Approximate time: 10 minutes Materials to prepare: Large piece of paper per 2‐4 participants Markers Optional: Technology Integration Options Active Learning Tool 3.0.50 Optional: Internet access 1. Split participants into groups of 2‐4. 2. Provide each group with a large piece of paper and several different colored

markers. 3. Ask participants, “What do you think of when you hear the words “getting

paid?” and “What do you know about getting paid?” 4. Have participants discuss with their group and record their thoughts on the

piece of paper. 5. Have participants use a different colored marker to circle words that best

describe their discussion. 6. Use an online word cloud creator to have participants create a word cloud of

the words circled on their paper. Recommended online word cloud creators are identified in the Technology Integration Options Active Learning Tool 3.0.50 guide.

a. If Internet access isn’t available, have participants create a word cloud by hand.

7. Refer to the word cloud throughout the facilitation. 8. After the lesson is complete, have participants review their word cloud to

determine if they would make any changes based upon what they learned. Or, have participants create a second word cloud and compare the two.





Page | 4 2.3.9


Option 2: The Big Bang Theory Approximate time: 5‐20 minutes Materials to prepare: Big Bang Theory season 3 episode 14 titled “The Einstein Approximation”

video clip o Review the clip in advance to be sure it is appropriate for your

classroom. Optional: Internet access for instructor 1. Show a clip from the television sitcom The Big Bang Theory.

a. The show focuses around characters Penny (who is an aspiring actress working as a waitress) and Sheldon, Leonard, Raj, and Howard (who are highly educated scientists). The discussion can focus on how each character has invested in their human capital and how that has affected their employment options and pay.

2. Several clips are effective. A clip from season 3 episode 14 titled “The Einstein Approximation” which was aired on 1/2/2010 is recommended.

a. In this episode Sheldon is stuck on the solution to a complex physics problem. Sheldon seeks a number of alternative approaches to change his thinking and free the mental block, including working with Penny at The Cheesecake Factory.

3. Potential discussion questions include: a. What are characteristics of the workplace setting? b. Are Sheldon’s stereotypes of “menial” or “pedestrian” jobs accurate? c. What type of employee benefits do you believe Penny has as a part of

her job? What employee benefits does Sheldon have? How are they different and similar? Are there any employee benefits that both Penny and Sheldon’s employers are required to provide?

d. Is Penny self‐employed or employed by an employer? What about Sheldon?

e. Do Sheldon and Penny have to pay the same income and payroll taxes even though they have very different types of jobs?

RECOMMENDED FACILITATION

PowerPoint Presentation and Note Taking Guide Approximate time: 90 minutes Materials to prepare: Getting Paid PowerPoint presentation 2.3.9.G1 1 Getting Paid Note Taking Guide 2.3.9.L1 per person 1 Form W‐4 per person (download online) Optional: Internet access for participants Optional: scratch paper Optional: Tablet Applications for the Personal Finance Classroom Active

Learning Tool 3.0.52 Optional: Sample Pay Stub 2.3.9.E2 1. Present the Getting Paid PowerPoint presentation 2.3.9.G1. 2. Provide each participant with a Getting Paid Note Taking Guide 2.3.9.L1.

Big Bang Theory Episodes can be accessed from a variety of sources including CBS, purchasing the box set, YouTube or Hulu. Some sites charge a fee.

Encourage participants to visit the Consumer Jungle website to read articles written by young adults about getting paid.

Replay the clip after instruction to enhance the discussion questions.

http://consumerjungle.org/


Page | 5 2.3.9


Part 1: Sources of Employment 3. Slide 1: Introduction 4. Slide 2: What are the two primary sources of employment?

a. Ask participants what they believe are the two primary sources of employment.

i. Being self‐employed and being employed by an employer. b. Ask participants what sources of employment their family members

have: self‐employed or employed by an employer? 5. Slide 3: Salary vs. Hourly

a. Some employees are paid an hourly wage and earn a specific rate for every hour worked. The federal government sets a minimum hourly wage (known as minimum wage), and employers are required to pay employees at least that amount per hour. Some states have their own minimum wage that is higher than the federal minimum wage. Other employees are paid a salary which is a set amount of money and not dependent on the specific number of hours worked.

i. Ask participants if they would rather be paid a salary or hourly wage. Why?

Part 2: Methods of Payment 6. Slide 4: What methods do employers use to pay employees?

a. Ask participants how employers pay employees. i. The three main methods are paper paycheck, direct deposit,

and payroll card. 7. Slide 5: Paper Paycheck and Direct Deposit

a. Discuss the characteristics of paper paycheck and direct deposit payment methods.

8. Slide 6: Payroll card a. Fees are common with payroll cards. It is important to examine all

fees before using. b. Optional: Have participants create a pros and cons list for each of the

three payment types: paper paycheck, direct deposit, and payroll card. This may be completed in several ways:

i. On a piece of scratch paper ii. On the Getting Paid Note Taking Guide 2.3.9.L1. iii. Use a Pros and Cons tablet application. Refer to the Tablet

Applications for the Personal Finance Classroom Active Learning Tool 3.0.52 for examples.

c. Ask participants which payment method would work best for them and why. Share.

Part 3: Payroll Deductions 9. Slide 7: Payroll deductions

a. Employers make several deductions to the wages employees earn. Deductions are taken from the employee’s gross income. When all deductions are taken out of gross income, the employee is left with net income.

b. Some deductions are mandatory and taken from everyone’s wages and some deductions are optional and depend on the employer and


Page | 6 2.3.9


employee. 10. Slide 8: What are the five main types of taxes?

a. Ask participants what the five main types of taxes are. i. Property taxes are on property such as land, buildings and

motor vehicles. ii. Sales tax is a tax on purchased goods and services. iii. Excise taxes are taxes collected from the seller or retailer and

often remain hidden in the price. Examples are gasoline, hotel rooms, cigarettes, etc.

iv. This will be a review if The Basics of Taxes Lesson Plan 2.2.2 was previously taught.

b. Income and payroll taxes are withheld from wages by employers. 11. Slide 9: Why are income and payroll taxes deducted from wages?

a. Ask participants to brainstorm why income and payroll taxes are deducted from wages.

i. Having income and payroll taxes deducted from wages in increments helps employees manage their personal income and payroll tax liability which is the total tax bill. This prevents individuals from having to pay their total tax liability at one time.

12. Slide 10: What are the mandatory income and payroll tax deductions? a. Ask participants what the mandatory income and payroll tax

deductions are. i. Income taxes include federal and state income tax (if the

state in which they are being paid has a state income tax), and payroll tax includes Social Security and Medicare.

13. Slide 11: Federal Income Tax a. Federal income tax is the largest required deduction taken from an

employee’s gross income. The amount deducted depends on two things: the amount of money earned and the information provided on the Form W‐4.

b. Ask participants to brainstorm how they benefit from paying federal income taxes.

14. Slide 12: What is a Form W‐4? a. Ask participants if they know what a Form W‐4 is. b. The information provided on the Form W‐4 determines the

percentage of an employee’s pay that will be deducted for federal income taxes.

c. This form is completed by the employee when starting a job. d. Optional: Provide participants with a Form W‐4 to reference and

complete. 15. Slide 13: Form W‐4 Allowances

a. An allowance is used to determine the amount of federal taxes deducted from the paycheck.

b. As a general rule of thumb, the employee may (but isn’t required to) claim an allowance for every dependent.

16. Slide 14: Allowances a. The number of allowances claimed should result in the amount of

federal income tax being deducted to be about equal to that person’s

Conduct a virtual tour using Google Earth to identify public services and facilities provided through tax dollars.

Use the IRS Understanding Taxes Education website for activities including an online Form W‐4 simulation.

https://takechargetoday.arizona.edu/lessonplans/basics-taxes

Page | 7 2.3.9


federal income tax liability. This is important so an individual does not owe money at the end of the year nor have they loaned the federal government money resulting in a tax return by having paid too much.

b. Employees may change their Form W‐4 at any time to have more or less federal income taxes deducted from their wages.

17. Slide 15: State Income Tax a. The amount, if any, deducted varies between states and depends on

gross pay. b. Ask participants if they know if their state has a state income tax. If

Internet is available have participants research the answer. A website with this information is included in the supplemental resources section.

18. Slide 16: What is Social Security? a. Ask participants if they know what Social Security is. Describe. b. Stress that the employer matches the amount paid to Social Security.

19. Slide 17: What is Medicare? a. Ask participants if they know what Medicare is. Describe. b. Stress that the employer matches the amount paid to Medicare. c. Medicare and Social Security are often referred to as FICA.

20. Slide 18: What are optional payroll deductions? a. Ask participants if they know what types of optional deductions may

be deducted from an employee’s paycheck. b. Employee benefits may be deducted from wages if the employer

offers benefits. c. If the employee opts into these benefits, the employee’s portion of

the cost will be deducted from gross income. Even though these benefits cost the employee, the employee will typically pay much less than privately purchasing that same benefit.

d. For more information about employee benefits, reference the Lifelong Employment Lesson Plan 2.3.7.

Part 4: How Employers Further Support Employees 21. Slide 19: How Employers Further Support Employees

a. Employers are required to purchase workers’ compensation and unemployment insurance for each employee at no cost to the employee.

b. Workers’ compensation and unemployment insurance are designed to protect the employee.

22. Slide 20: How Employers Further Support Employees a. Employers may also support employees by offering a set amount of

paid or unpaid days for illness, personal use, and holidays. The specific amount of days and amount of pay for each type of day depends on the employer.

b. Employers match employee’s contributions to Social Security and Medicare, therefore helping to fund those programs.

Part 5: Pay Stub 23. Slide 21: What is a pay stub?

a. Depending upon the employer and the payment method you may or

https://takechargetoday.arizona.edu/lessonplans/lifelong-employment

Page | 8 2.3.9


may not receive a pay stub for every pay period. However, employees may request a pay stub or another type of earnings statement that summarizes the deductions taken from wages at any time. The pay stub format will vary across employers.

b. Ask participants why it is important to review their pay stub. c. Provide participants with a copy of Sample Pay Stub 2.3.9.E2 to use as

a reference. If you are using the Getting Paid Note Taking Guide 2.3.9.L1 a sample pay stub is included there.

24. Slide 22‐28: Pay Stub a. Explain each section of the pay stub. Have participants circle or

highlight each section on their Sample Pay Stub 2.3.9.E2. 25. Slide 29: Can an employer pay employees cash?

a. Ask participants if an employer can pay employees in cash. i. Yes, some employers may want to pay employees in cash

rather than by a paper paycheck, direct deposit, or payroll card. However, if presented with the option to be paid in cash they should ensure that the employer is deducting income and payroll taxes from the wages.

26. Slide 30: Summary a. Summarize the main points of the lesson.

CONCLUSION OPTIONS There are three conclusion options provided for this lesson. 1. Option 1: Taboo® 2. Option 2: Getting Paid Math 3. Option 3: Money World Squares

Option 1: Taboo® Approximate time: 30 minutes Materials to prepare: Taboo® Active Learning Tool 3.0.28

o 1 set of Getting Paid Taboo Cards 3.0.28.H1 for every 5‐9 participants 1 timer for every 5‐9 participants 1. Conduct the Taboo activity. Refer to the Taboo® Active Learning Tool 3.0.28

for directions and materials. a. The object of Taboo® is for a player to have his/her team guess the

term at the top of a Taboo® card by describing the term without using specific words.

Option 2: Getting Paid Math Approximate time: 20 minutes Materials to prepare: 1 Getting Paid Math 2.3.9.A1 per participant 1. Complete the Getting Paid Math 2.3.9.A1 worksheet as directed.

a. Stress the importance of checking your pay stub for accuracy.

Option 3: Money World Squares Approximate time: 30 minutes

Visit the IRS website Filing Requirements for Most Taxpayers for more information.

Distribute a variety of paycheck stubs from sources such as the Life in… 2.0.1 lesson plan scenarios. Discuss why different amounts were deducted for each situation.

http://takechargetoday.arizona.edu/lessonplans/life-inunited-states-0




Page | 9 2.3.9


Materials to prepare: Refer to the Money World Squares Active Learning Tool 3.0.11 for materials

o Nine x and o cards from the Moneyworld Squares Activity Cards

3.0.11.H1

o Optional: Three chairs

o Getting Paid Lesson Plan Questions 3.0.11.E2 1. Conduct the Money World Squares activity. Refer to the Money World

Squares Active Learning Tool 3.0.11 for directions and materials. a. The object of MoneyWorld Squares is for participants to work in

teams to answer questions. It is played like Tic‐Tac‐Toe or Hollywood Squares®.

ASSESSMENT OPTIONS There are two assessment options provided for this lesson. 1. Option 1: Reinforcement Worksheet 2. Option 2: The Ways We Are Paid Scenario

Option 1: Reinforcement Worksheet Approximate time: 20 minutes Materials to prepare: 1 Getting Paid Reinforcement Worksheet 2.3.9.A2 per participant 1. Complete the Getting Paid Reinforcement Worksheet 2.3.9.A2 reinforcement

worksheet.

Option 2: The Ways We Are Paid Scenario Approximate time: 30 minutes Materials to prepare: 1 The Ways We Are Paid 2.3.9.A3 per participant 1. Complete The Ways We Are Paid 2.3.9.A3 individually or in small groups to

examine some of the benefits of being paid.




Page | 10 2.3.9.E1


Getting Paid Vocabulary List

TERM DEFINITION

1 Commission A fee that a salesperson receives upon completion of a sale

2 Dependent A person who relies on the taxpayer for financial support

3 Direct deposit Wages are deposited directly into a depository institution account

4 Employee benefits Employers may offer employee benefits in the form of products or services that add extra value for employees beyond earned wages

5 Employer contributions The amount the employer has contributed to various employee benefits

6 Employment Agreement between an employer and employee

7 Form W‐4 (Employee’s Withholding Allowance Certificate)

The form that determines the percentage of an employee’s pay that will be withheld for federal taxes

8 Gross income Amount of money earned before payroll taxes

9 Income tax Taxes paid to federal, state and local governments on the amount of money earned

10 Medicare A federal program whose main purpose is to help pay for health care for those over 65

11 Net income Amount of money left once all deductions have been taken from gross income

12 Paper paycheck A check written to a worker in the amount of money earned

13 Payroll card A reloadable debit card onto which a worker's pay is loaded

14 Payroll tax Taxes withheld or paid on your behalf by your employer

15 Pay period The regular schedule by which employers pay employees

16 Pay stub Outlines the deductions made to wages

17 Salary Fixed amount of money or compensation paid to an employee by an employer in return for work performed

18 Social Security A federal government program that funds retirement accounts, financially supports citizens who have experienced profound disability, the premature death of a parent (if under the age of 18), or the premature death of a spouse in a family with children

19 Tax liability Total tax bill

20 Unemployment insurance

A source of income for workers who have lost their jobs through no fault of their own

21 Workers’ compensation

A state‐sponsored system that pays monetary benefits to workers who become injured or disabled on the job

Page | 11 2.3.9.L1


Getting Paid Note Taking Guide

Total Points Earned

Name

Total Points Possible

Date

Percentage

Class

What is i

Sources of Em

ploym

ent

An employer is:

An employee is:

Paper Paycheck

Descripton:

Pro:

Con:

Direct Deposit

Description:

Pro:

Con:

Payroll Card

Description:

Pro:

Con:

What is the difference between being paid an hourly wage vs. salary?

Page | 12 2.3.9.L1


Identify and define the payroll deduction process.

Federal Income Tax

=

Largest Required Deduction

Amount deducted depends on:

1.

2.

Form W‐4 information that determines the

percent of pay deducted is:

1.

2.

What is an allowance?

State Income Tax

Two characteristics are...

Social Security

The purpose is...

Medicare

The purpose is..

What are four ways employers further support employees?

Mandatory Payroll Deductions

How do optional employee benefits benefit an employee?

Page | 13 2.3.9.L1


Employee Information Pay Date: 6/11/2013

Name Identification Number

Address Pay RatePay Period

Joe Beakens 00112233 293 Michael Grove

$15.00 5/1 –5/31/2013

Summary

Gross Income Total Personal Deductions Net Income

Current $2,400.00 $747.00 $1,653.00

YTD $12,000.00 $3,735.00 $8,265.00

Earnings

Type Rate Hours Current YTD

Regular $15.00 160 $2,400.00 $12,000.00

Overtime 0 0 0 0

Deductions

Type Personal Deduction Employer Contribution

Federal income tax $249.40 0

State income tax $100.00 0

Social Security and Medicare $183.60 $183.60

Retirement plan $144.00 $144.00

Health insurance $100.00 $400.00

Workers’ compensation 0 $13.80

Unemployment insurance 0 $6.26

Employee Leave Balances

Type Beginning balance current

Beginning balance YTD

Used Current Used YTD Ending Balance

Personal 10 15 0 5 10

Sick 5 5 0 0 5

What is a pay stub?

How is pay period

different than pay

date?

Describe year‐to‐date

What are two reasons it is important to have income and payroll taxes deducted from wages paid in cash?

How do employer

contributions benefit

the employee?

Page | 14 2.3.9.E2


Sample Pay Stub

Employee Information Pay Date: 6/11/2013

Name Identification Number Address Pay Rate Pay Period

Joe Beakens 00112233 293 Michael Grove $15.00 5/1 – 5/31/2013

Summary


Current $2,400.00 $777.00 $1,623.00

YTD $12,000.00 $3,885.00 $8,115.00

Earnings


Regular $15.00 160 $2,400.00 $12,000.00

Overtime 0 0 0 0

Deductions




Social Security and Medicare $183.60 $183.60

Retirement plan $144.00 $144.00

Health insurance $100.00 $400.00



Employee Leave Balances

Type Beginning balance current

Beginning balance YTD

Used Current Used YTD Ending Balance

Personal 10 15 0 5 10

Sick 5 5 0 0 5

Page | 15 2.3.9.A1


Getting Paid Math

Total Points Earned

Name

30 Total Points Possible

Date

Percentage

Class

Directions: Answer the following questions to provide information for the paycheck. Part 1: Joe’s Hourly Pay Stub In the last pay period, Joe worked 80 hours earning $12 per hour. Use the work space and math tips to answer questions 1‐5 to calculate Joe’s pay stub amounts.

Pay stub categories Work Space & Math Tips Pay stub amounts

What is Joe’s gross pay? 80 hours x $12 per hour =

1.

What is Joe’s Social Security deduction (6.2% of gross pay)?

Gross pay___________ x .062 =

2.

What is Joe’s Medicare deduction (1.45% of gross pay)? Gross pay___________ x .0145 =

3.

In addition to Social Security and Medicare if Joe had $46 in Federal Income Tax, $21 in State Income Tax and $65 in employee benefits withheld from his paycheck, what were Joe’s total deductions?

Social Security__________ + Medicare__________ + $46 Federal Income Tax + $21 State Income Tax + $65 employee benefits =

4.

What was Joe’s net pay? Gross pay__________ ‐ total deductions _______

5.

How much will Joe’s employer pay per pay period for Medicare and Social Security?

Hint: A way to double check your work is to add your deductions and your net income. If they do not equal your gross income, then you need to recalculate.

Gross Income = Net Income + Deductions

Page | 16 2.3.9.A1


Part 2: Edwin’s Salary Pay Stub Edwin has a $60,000 annual salary and is paid monthly. Use the work space and math tips to answer questions 6‐10 to calculate Edwin’s March pay stub amounts. Then, calculate the year‐to‐date amounts.

Pay stub categories Work Space & Math Tips March Pay stub amounts

What is Edwin’s monthly gross pay? $60,000 annual salary / 12 months per year =

6.

What is Edwin’s Social Security deduction (6.2% of gross pay)?

Gross pay___________ x .062 =

7.

What is Edwin’s Medicare deduction (1.45% of gross pay)? Gross pay___________ x .0145 =

8.

In addition to Social Security and Medicare if Edwin had $413 in Federal Income Tax, $209 in State Income Tax and $250 in employee benefits withheld from his paycheck, what were Edwin’s total deductions?

Social Security__________ + Medicare__________ + $413 Federal Income Tax + $209 State Income Tax + $250 employee benefits =

9.

What was Edwin’s net pay? Gross pay__________ ‐ total deductions _______

10.

Edwin is paid monthly. He earns the same amount and has the same deductions each month. Use the answers calculated in questions 6‐10 to determine his year‐to‐date in each category. This is Edwin’s 3rd paycheck of the year.

Pay stub categories Work space Year‐to‐date amounts in Edwin’s March pay stub

Gross pay 11.

Social Security 12.

Medicare 13.

Total deductions 14.

Net pay 15.

Page | 17 2.3.9.A1


Part 3: Zoe’s Pay Stub Zoe began working January 1 and her employer needs your assistance to complete the calculations for her pay stub. Because Zoe works part‐time, her employer does not offer benefits including health insurance, retirement and accruing employee leave time. Complete the calculations for her pay stub to fill in the paystub below. Use information from the pay stub to answer questions 16‐20.

Employee Information Pay Date 4/11/2013

Name Identification Number Address Pay Rate Pay Period

Zoe Dashwood 0012345 7961 North Road $13.50 3/1 – 3/31/2013(monthly)

Summary


Current

YTD

Earnings


Regular $13.50 80

Overtime 0 0 0 0

Deductions




Social Security and Medicare $82.62



16. What is Zoe’s gross pay? 17. What is Zoe’s year‐to‐date gross pay? 18. What is Zoe’s Social Security and Medicare deduction? 19. What are Zoe’s total deductions? 20. What is Zoe’s net pay?

Page | 18 2.3.9.A2


Getting Paid Reinforcement Worksheet

Total Points Earned

Name

21 Total Points Possible

Date

Percentage

Class

Directions: Match the correct term with the correct definition by placing the letter on the appropriate blank. 1. ________ Total tax bill 2. ________ Amount of money left once all

deductions have been taken from gross income 3. ________ Products or services provided by an

employer that adds extra value for employees beyond wages paid

4. ________ A person who relies on the taxpayer for financial support

5. ________ Outlines the deductions made to wages

A. Net income B. Dependent C. Employee benefits D. Pay Stub E. Tax liability

Directions: Circle the correct answer that would be used in each situation. 6. While working at his factory job, Joe slipped on the wet floor. He went to the doctor where they told him he broke his ankle. Which benefit will cover Joe’s medical expenses?

a. Unemployment insurance b. Workers’ compensation c. Paid sick days d. Medicare

7. Lisa really likes her job as a flight attendant and she is getting positive reviews from her supervisor.

Unfortunately, due to the state of the economy, Lisa received her layoff notice. Which benefit will cover a portion of Lisa’s income while she looks for a new job?

a. Unemployment insurance b. Workers’ compensation c. Paid sick days d. Medicare

8. Stacey is starting her new job at Hats‐n‐More. In order for her manager to know how much to withhold in

federal taxes, Stacey has to fill out which form? a. W2 b. I9 c. W4 d. 1040ez

Page | 19 2.3.9.A2


Directions: Answer the following questions by writing a short answer. 9. What are two methods employers may offer to pay employee wages? Give an advantage and

disadvantage for each method. (2 points) 10. Why are employee benefits important? Give two examples of employee benefits. (2 points) 11. Explain five pieces of information that you should look for on your pay stub. (5 points) 12. Give an explanation for what would happen if employers did not deduct monies for income and payroll

taxes on an ongoing format. 13. Who benefits more from being paid in cash: employer or employee? Explain your answer. 14. Who are the dependents in your household? Why are you considered a dependent in your household? (2

points)

Page | 20 2.3.9.A3


The Ways We Are Paid

Total Points Earned Name

15 Total Points Possible Date

Percentage Class

Directions: Learn about Tom in the scenario below and use the information to answer the questions that follow.

Tom has been a full time firefighter for six years. He loves every shift spent at the firehouse. A few months ago, while working, Tom fell through the floor of the burning home. After a trip to the emergency room, Tom was told he had a broken leg that required surgery. Tom made it through surgery fine but had to wear a cast and walk on crutches for the next six weeks. In addition, he needed four weeks of physical therapy after the cast was removed. Since his injury occurred while he was working, his medical expenses qualified for workers’ compensation. Tom filed a workers’ compensation claim as soon as his injury was diagnosed. Workers’ compensation paid for all of his medical expenses ‐ a grand total of $31,365 between the emergency room visit, surgery, doctor’s visits, a short hospital stay, and physical therapy. Tom’s employer gave him a light duty assignment while he recuperated. Therefore, Tom only missed two weeks of work, rather than the entire ten weeks while he was on crutches and receiving physical therapy. As one of his employment benefits, Tom had accumulated 35 paid sick days over the last six years. He was able to use these sick days during his recovery period, so he didn’t lose any income during his two weeks of not working and the additional 5 days missed for follow up exams and physical therapy. This totaled $2,500 in wages that would have been lost without paid sick days. Thanks to workers’ compensation and sick leave provided by his employer, Tom had a quick recovery and returned to fighting fires with no financial hardships from medical bills and lost wages. This helped him avoid stress during his recovery and his quick return to work enhanced Tom’s well‐being.

Page | 21 2.3.9.A3


1. Complete the chart below:

How did the program

or benefit help Tom?

What monetary

benefit (dollar value)

did Tom receive from

each

benefit/program?

How much did Tom

contribute financially

to have each

benefit/program

available to him?

If the

benefits/programs

were not available,

what would it have

cost Tom out of

pocket?

Workers’

compensation

Paid sick leave Lost wages:

2. How much did Tom have to pay to recover from his injury? Explain. (2 points)

3. What would have happened to Tom’s income if he didn’t have the benefit of paid sick days?

4. Do you believe Tom would have had the same outcome and quick recovery without workers’

compensation and sick leave? Provide at least two reasons to support your answer. (2 points)

5. Employers pay their employees in different ways. What is one way Tom was “paid” by his employer

without receiving a direct wage?

6. Using Tom's story as an example, write a short paragraph comparing the benefits of having a job with

employer provided benefits to being paid cash by your employer.

© Take Charge Today – August 2013 – Ge ng Paid – Page 1 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Ins tute at The University of Arizona

2.3.9.F1

Ge ng Paid Advanced Level

Employment is an agreement between an employer and employee. An employer hires a person in exchange for compensa on, usually in the form of wages or a salary. An employee is a person who agrees to provide certain services at a job for an employer. The agreement between an employee and employer can be verbal, implied or wri en in an employment contract that both par es sign.

Some employers pay their employees an hourly rate of pay or hourly wage. Jobs such as restaurant servers, cashiers, host/hostesses and cooks typically pay an hourly wage. The federal government sets a minimum hourly wage (known as the minimum wage), and employers are required to pay their employees at least that amount per hour. Some states set a higher minimum wage than the federal minimum.

A salary is a fixed amount of money or compensa on paid to an employee by an employer in return for work performed. Salary is commonly paid in stages at fixed intervals, for example,

monthly payments of one‐twel h of the annual salary. Salaries do not depend on the specific number of hours worked. If you accept a salaried posi on you may find yourself working more than the standard 40 hours a week to " do whatever it takes" to complete a job successfully. And when workweeks are shortened, your pay is typically not nega vely affected. Teachers, doctors, a orneys and accountants are all salaried employees.

Commission is a fee that a salesperson receives upon comple on of a sale. It is a mo va onal system of payment designed to encourage sales staff to sell more. If you accept a job as a car salesperson, a real estate professional, or a financial planner you most likely will earn a commission when a sale has been made.

Methods of Payment

There are several systems employers use to deliver earned wages to their employees. Here are three popular ones. Your employer may let you choose the one you prefer.

Paper paycheck ‐ Your employer pays you by authorizing a check wri en to you in the amount of money earned. You are then able to access your wages by cashing your paycheck and/or deposi ng it in a depository ins tu on account.

Direct deposit – Your wages are deposited directly into your depository ins tu on account. This method is more secure than a paper paycheck because there is no direct check handling. Typically the employee receives a “receipt or paystub” on payday when this payment method is used.

Payroll card ‐ A payroll card is a reloadable debit card onto which a worker's pay is loaded. This is a good op on if you don't have, can't get or don't want a tradi onal deposit account. When you make a purchase, funds are automa cally deducted from the balance of your payroll card. You may pay fees when using a payroll card, or if you want to use the card to withdraw cash. The fees vary depending upon the depository ins tu on, so it is important to obtain a list of all fees before using a payroll card.

Which payment method would you prefer? Why?

Regardless of the

type of payment you

receive for a job

completed, an

employer is required

by law to pay

employees on a

regular basis


2.3.9.F1

Your Paycheck Tax Liability

Payroll Deduc ons

Employers make several deduc ons from the wages you earn. Your gross income is the amount of money earned before payroll taxes. Your net income is the amount of money you are le with once all deduc ons have been taken from your gross income. Net income is commonly referred to as “take home pay.” Some deduc ons are mandatory and taken from everyone’s wages. Other deduc ons are op onal and depend on employee preferences.

Gross Income Deduc ons Net Income

You are responsible for yourself.

While you may think there is nothing wrong with ge ng paid in cash, you need to be aware of some serious pi alls in this method of payment. Handling cash on payday significantly raises your risk of loss or the . You are s ll responsible for paying state and federal income taxes, and se ng aside enough from your pay to cover that expense. Cash payrolls do not give you the opportunity to pay into the Social Security system and will limit your ability to collect benefits later in life. And, if you become injured on the job and can no longer work, you will not have the protec on of Worker’s Compensa on.

Your employer is required to withhold income tax and other payroll taxes from your paycheck. Managing the amount of your income and payroll tax withholdings on your paycheck can help you avoid paying addi onal taxes at the end of the year.

Income tax is the tax you pay to federal, state and local governments on the amount of money you earn. Taxable income is total income less allowable deduc ons. Personal characteris cs such as marital status are considered deduc ons and influence your tax liability (total tax bill). Income tax is a key source of funds that the government uses to fund its ac vi es and serve the public.

Payroll taxes are withheld or paid on your behalf by your employer. The amount of taxes deducted from your paycheck is based on the wage or salary you earn. In the United States both state and federal authori es collect some form of payroll tax.

RR

Federal Income Tax – Is a tax levied by the United States Internal Revenue Service (IRS) on the annual earnings of individuals, corpora ons, trusts and other legal en es. Employers are required by law to withhold a percentage of your wages to pay this tax. The federal income tax represents the largest deduc on taken from your gross income. The amount withheld depends on two things: the amount of money earned and the informa on you provide on the Form W‐4.

The Form W‐4 is also called an Employee’s Withholding Allowance Cer ficate. The number of allowances you claim on your W‐4 determines the percentage of pay withheld from

your paycheck to pay your federal income tax liability.

The more allowances you claim, the less income tax will be withheld from your paycheck. You can claim one allowance for yourself, one for your spouse and one for each of your dependents.

A dependent is a person who relies on you, the taxpayer for financial support. A dependent may be a qualifying child or qualifying adult rela ve. As a general rule of thumb, you may claim an allowance for every dependent. You may change your Form W‐4 at any me to have more or less federal income taxes deducted from your wages.

Some employees claim fewer allowances than permi ed in order to be sure they don’t owe addi onal tax at the end of the year. This is called over‐withholding, and can lead to a tax refund the following year. Over‐withholding has advantages and disadvantages. But, the point is that you can use income tax withholding as a financial management tool.


2.3.9.F1

How do you benefit from paying taxes?

State Income Tax – Is an income tax collected by most, but not all states (Florida, for instance, does not require it’s residents to pay a state income tax). If you live in a state that has a state income tax your employer will deduct an amount from your wages. The amount deducted varies between states and depends on the amount of gross pay you have earned.

Social Security – Employers are required by law to withhold a Social Security tax from your earned wages. Social Security is a federal government program that funds re rement accounts, financially supports ci zens who have experienced profound disability, the premature death of a parent (if under the age of 18), or the premature death of a spouse in a family with children. You contribute 6.2% of your earned income to Social Security un l you have reached your annual required contribu on amount that varies each year.

Medicare – Employers are required by law to withhold from your earned income this payroll tax contribu on to Medicare. Medicare is a federal program whose main purpose is to help pay for health care for those over 65. You contribute 1.45% of earned income to Medicare and there is no annual limit.

The Form W‐4

may be

downloaded for

free from the

Internal Revenue

Service’s website.

RR C ... C ...

OO D D

Employee benefits ‐ Employers may offer you employee benefits in the form of products or services that add extra value for employees beyond earned wages. You may pay a por on of the cost of the benefit. This addi onal payment deduc on, taken from your gross income, is common with health care insurance, re rement plans, and flexible spending accounts. You typically pay much less by op ng into these benefits and having their costs deducted from your paycheck than if you were to privately purchase the same product.

Pay Stub

Informa on regarding deduc ons is outlined on your pay stub. Your “earnings statement” (pay stub) is provided by your employer and is available to you at the end of each pay period regardless of how you collect your wages. With the wide array of wage payment methods available to you from your employer, you may have to request a pay stub if one is not automa cally provided. You may do this at any me during your employment.

The look of pay stubs may vary from one employer to the next, but the informa on provided on this document is basically the same and will include:

A. Employee Informa on – As an employee, your full name, address, and employee iden fica on number are standard informa on. Depending on the employer, this sec on may include addi onal informa on such as your job tle, department, pay rate, etc.

B. Pay Period – A pay period is the regular schedule by which your employer will pay you. Pay periods are typically weekly, bi‐weekly or monthly and are usually determined by your employer. The last day of the pay period is not the actual day you will receive your paycheck. The pay date is delayed to allow the employer me to accurately compute your wages and pay you for all me worked in a pay period.

C. Hours and Earnings –These indicate how the amount of wages you earned was calculated. If you’re paid an hourly wage, the amount of hours worked and pay rate will be indicated. Hours and earnings may be divided into two sec ons; current and year‐to‐date (YTD). The current sec on indicates the amount of wages you earned for the current pay period. The YTD sec on indicates the amount of wages you earned from January 1 to the last day of the current pay period.


2.3.9.F1

D. Gross Income – This is the amount of pay you earned before deduc ons. This sec on of your pay stub may also include a YTD amount.

E. Deduc ons – This sec on lists all “subtrac ons” taken from your gross income including income taxes, payroll taxes and any addi onal op onal deduc ons. Your deduc ons may also be reflected in a YTD amount on your pay stub.

F. Employer Contribu ons – If your employer has contributed to various employee benefits and other contribu ons on your behalf, that amount will be reflected in this sec on. Some employers opt not to disclose their employer contribu ons on employee pay stubs.

G. Net Income – This is your “take home pay.” It is the amount of pay you earned a er your deduc ons.

H. Employee Leave Balances ‐ A summary of the employee’s me balances (if applicable) including sick, vaca on, and/or holidays.

Employee Informa on Pay Date: 6/11/2013 Name Iden fica on

Number Address Pay

Rate Pay Period Joe Beakens 00112233 293

Michael

Grove

$15.00 5/1 – 5/31/2013

Summary Gross Income Total Person‐

al Deduc ons Net Income

Current $2,400.00 $747.00 $1,653.00 YTD $12,000.00 $3,735.00 $8,265.00 Earnings Type Rate Hours Current YTD Regular $15.00 160 $2,400.00 $12,000.00 Over me 0 0 0 0 Deduc ons Type Personal Deduc on Employer Contribu on Federal income tax $249.40 0 State income tax $100.00 0 Social Security and Medicare $183.60 $918.00 Re rement plan $144.00 $144.00 Health insurance $100.00 $400.00 Workers’ compensa on 0 $13.80 Unemployment insurance 0 $6.26 Employee Leave Balances Type Beginning

balance

current

Beginning

balance YTD Used

Cur‐

rent

Used

YTD Ending Balance

Personal 10 15 0 5 10 Sick 5 5 0 0 5

A B

c

D

E F

G

H

Some employers may want to pay you in cash rather than by a paper paycheck, direct deposit, or payroll card. Even though it may seem that your employer is doing you a favor by not deduc ng taxes and giving you more take home pay, this is probably benefi ng the employer more than you. Paying employees in whole or par ally in cash is a common method for an employer to evade income and employment taxes. The employer may use this method to avoid paying its share of required payroll taxes, and other responsibili es such as paying into unemployment insurance or workers’ compensa on funds on behalf of its employees. An employer that prefers cash payment may even retain withholding taxes and not send them to the government.

There are some cases when cash payment is normal. There are mes, especially with people under the age of 18, when a person completes small odd jobs and is paid in cash, such as for mowing lawns, babysi ng, etc. As long as you don’t earn more than $600 for the en re year the employer usually doesn’t need to make tax deduc ons from the wages paid. Refer to the IRS document “Filing Requirements Chart for Most Taxpayers” or ask a tax professional to determine if you should pay taxes on cash earned.

Final Note: Be Cau ous About Payment in Cash

getting paid lesson plan 2.3 - seps - home integration options active learning tool 3.0.50 tablet...

Documents