1. Objective 4.01
Students will be able to understand types of work
compensation and forms used for work and income
tax purposes.
http://www.themint.org/kids/decoding-your-paycheck.html
2. What are the ways in which an employee can
be paid?
What should employees know about
employment and income tax forms?
3. Types of monetary compensation---wages, salary,
commissions, tips, bonuses
Wages---an amount of money paid for a specified quantity of labor
Minimum wage---the lowest wage employers may legally pay workers
(set by the Fair Labor Standards Act)
Types of wages---full-time, part-time, flexible/seasonal, and overtime
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
Performance Bonus---money in addition to base pay, either as
reward for performance or as share of profit
Production – money earned for a volume of product created, more
product made = more gross earnings
4. Federal law that first established
Minimum wage
Maximum hours, Overtime requirements
Child labor laws
# of hours, time limits
Type of work
Research:
When was FLSA enacted?
What is current minimum wage?
What are limitations on legal jobs for a 16 year old?
Type of jobs
Hours 16 year olds can work
6. Types of non monetary compensation
Non-monetary
compensation-employee Paid vacation, holidays and sick leave
does not get $ in paycheck, Insurance- group health, dental, life, vision
but employer pays for all
or part of these benefits-- Cost may be fully or partially paid by employer
also known as fringe
Savings/retirement plans if employer pays portion
benefits, or perks
Education-related benefits---tuition, credits, job
Benefits are not required training
by law, but are offered at
the option of employers Family -related benefits---child care, maternity
Individual employees leave, adoption leave/support, family leave
may negotiate with
their employer for a Unemployment Tax- required by law to be paid at
―benefits package‖, state & federal levels by employer
especially in
management situations Social Security - FICA requires employers to match
Employees who are every dollar contributed by employee to Social
union members Security
negotiate for their
benefits
7. When making an
employment
offer/acceptance,
benefits are a
critical element.
Employers offer the
best compensation
package available
to recruit and keep
high quality
employees.
9. Paycheck –
Traditional paper Monetary deductions
document subtracted for
Issued to an Mandatory systematic
employee for services Federal/state income taxes
rendered Employer sponsored
retirement
Most common
Court ordered garnishment
method of payment of wages
for work
Voluntary deductions
Employer physically
Insurance
provides the
Investments
employee with
Loan repayments
his/her paycheck
Pension contributions
Employee takes
and other benefits
check to financial
institution
10. Paycheck stub
Attached to the paycheck to show the deductions
Retained (kept)by employee for financial records
Contents of paycheck stub
gross pay, net pay, hourly wage, hours worked,
state/federal withholdings, Social Security tax,
employee’s name, Social Security number, total
earned and withheld, year to date, last day of pay
period
12. When employers directly deposit an
employee’s paycheck into an authorized
account
On payday, Employee receives a paycheck electronic
notice showing deductions
Direct deposit evidence cannot be cashed at bank
More secure because there is no direct handling
of the check & the employee knows exactly
which day paycheck will be deposited and
available for use
13. DEFINITION:
prepaid card offers
employees an BENEFITS TO EMPLOYEES
alternative to paper
Reduces or eliminates check
paychecks or directly
cashing fees
depositing wages into Offers ability to make
an employee’s financial purchases using credit card
networks
institution account Offers 24-hour access to
funds via ATMs; no need to
wait in lines
Reduces the need to carry a
lot of cash
Makes money transfers more
easily available to families
Provides a pseudo-bank
account—funds do not need
to be withdrawn entirely as
when using a check casher
14. Benefits to employers
Reduces bank processing and check handling fees
Reduces check printing costs
Reduces likelihood of check fraud
Reduces check reconciliation costs
Increases employee productivity (no time off to cash
or deposit paycheck)
Reduces lost/stolen check replacement costs
15. Income taxes are:
Taxes paid on earnings
Mandatory deductions from earnings
Estimates of taxes owed
Known as progressive taxes; the higher the income
earned, the higher the % rate of taxes
In contrast, sales taxes are regressive taxes; they impose
same rate to all sales of goods; therefore; higher taxes
(in comparison to earnings) are paid by those with
lower incomes than those with higher.
16. Used before beginning a job
W-4 – the Employee’s Withholding Allowance
Certificate; information provided here determines
the percentage of gross pay to be withheld for taxes
I-9 – the Employment Eligibility Verification form;
information gathered in this form is for employers to
verify eligibility of individuals for employment;
helps avoid hiring undocumented workers or others
who are not eligible to work in the United States
Social Security card or other identification
17. irs link: W-4 simulation
Complete simulation 1
Completed by
employee for
employer
payroll records
Provides
information for
tax deductions
Marital status
Exemption
status
SIMILAR FORM - NC-4 FOR TAX
WITHHOLDING FOR NORTH
CAROLINA RESIDENTS
irs link: calculate payroll taxes
19. Identity document
Required use for
Federal Income Taxes
20. I-9 proves your right to
work in US if you are not
a citizen.
Employment
Identification and
Verification Form
Employers must complete and
retain a Form I-9 for each
individual they hire for
employment for 3 years
from date hired
The form must be available for
inspection by authorized
U.S. Government officials
(e.g., Department of
Homeland Security,
Department of Labor,
Department of Justice).
On the form, the employer
must examine the
employment eligibility
and identity document(s)
an employee presents to
determine whether the
document(s) reasonably
appear to be genuine
21. Used after end of year when filing income taxes
W-2 - states amount of money earned and taxes paid
through previous year
Issued by employer to employee by January 31 of
following year
Form 1040/1040A/1040EZ - common forms for filing
federal income tax return
1099 Forms - Tax forms that report other sources of
income earned during a tax year. 1099-INT for interest
income, 1099-DIV for dividends on investments, and
1099-MISC for other sources of income such as contract
labor
23. Reports actual income and
deductions for the tax
year
Taxpayer must file by
April 15th of the following
year
Actual due compared to
estimated payments
Results in either refund or
additional payment to IRS
24. SAMPLE 1099 FORM
Reports income not
related to employment
Examples:
1099-DIV
Dividends
1099- INT
Interest income
1099-MISC
Contract labor
Distribution of pensions
Miscellaneous income
25. http://www.irs.gov/app/understandingTaxes/student/simulations.jsp
Complete Module 2 & 3:
W-2, Form 1099-Int, 1040EZ
Complete Module 7: Standard Deduction
26. Employees must retain appropriate records:
Records of deductible expenses, including receipts
and bank statements
Social Security number serves two major purposes:
(1) provides a record of your covered earnings for
retirement and disability benefits and (2) serves as
an identification number for the Internal Revenue
Service
27. Unwrap and slice the Payday candy bar. Read the
ingredients list on the label. Note: Just as each candy slice
contains some of each ingredient, so each paycheck contains
specific kinds of information.
Have students scan FEFE 1.13.1.F1 information sheet
“Understanding Your Paycheck” and complete the graphic
organizers Appendix 4.01A, “Forms of Compensation,”
Appendix 4.01B, “Money In, Money Out,” and Appendix
4.01C, “Employment, Wage and Tax Forms”
Have students complete the note-taking guide, FEFE
1.13.1. L1, “Understanding Your Paycheck and Tax Forms”
as they view FEFE PowerPoint “Understanding your
Paycheck.” Answer questions; discuss.
(In advance, download a blank Form W-4 and Form I-9 from
www.irs.gov). Stop at slides 12 and 13 and guide students
as they complete Form W-4 and Form I-9.
28. " W-4, work some more"
―W-2 your taxes are due".
1040EZ as in "easy" and
I-9-like the interstate- you travel from place to
place and sometimes you travel across the
border and you need to prove your citizenship,
i.e. Canada, Mexico.
29. Map your financial Don’t borrow what
future you can’t repay
Money doubles by the Don’t expect
―Rule of 72‖ something for nothing
Your credit past is High returns equal
your credit future high risks
Start saving young Know your take-
Stay insured home pay
Budget your money Compare interest
rates
Pay yourself first
http://www.jumpstartcoalition.org/files2010/2010_J$_Calendar.pdf