understanding paychecks where does your money go?

Understanding Paychecks

Where Does Your Money Go?

Pay Check Stub

Check Stub-the part of a paycheck that lists deductions from your salary

Personal Information

Personal Information:• Name• Social Security Number• Address

Pay Period

Pay Period– The length of time for which an employee’s wages

are calculated; most are weekly, bi-weekly, twice a month, or monthly

– The last day of the pay period is not always payday to allow a business to accurately compute wages

Gross Pay

Gross Pay– The total amount of an employee’s earnings

BEFORE deductions are taken out• This is calculated by multiplying the number of

hours worked by the hourly rate

$1,353.33

Net Pay

Net Pay– The amount of a paycheck AFTER all

deductions are taken out (sometimes referred to as take home pay)

$1,102.98

Deductions

Deduction– The amount of money taken

from an employee’s gross pay for taxes, insurance, social security, and other benefits

Required Deductions

Federal Withholding: taxes taken for federal fundingState Withholding: taxes taken for taxes for state fundingSocial Security: retirement/disability benefitsMedicare: health care program for elderly/disabled

Income Tax: the part of earnings that people must legally give to the government to pay for government services

Optional Deductions

(Medical) Insurance: Can get insurance through employer401K: Personal retirement

Current vs. Year to Date

Current: the amount paid for each deduction THIS pay periodYear-to-Date: the amount paid for each deduction so far THIS YEAR

$250.35

$1,502.10

Pay Check Math

GROSS PAY: $1,533.33

TOTAL DEDUCATIONS: $250.35

NET PAY: $1,282.98