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REQUIRED DEDUCTIONS

DO NOW… O n a sheet of paper, answer the following: 1. What is the Gross Pay? 2. What is the Net Pay? 3. Why is the Net Pay different from the Gross Pay?. Money subtracted from your gross pay for taxes by the government, also called payroll taxes: Federal Taxes State Taxes

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REQUIRED DEDUCTIONS

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  1. DO NOW…On a sheet of paper, answer the following:1. What is the Gross Pay?2. What is the Net Pay?3. Why is the Net Pay different from the Gross Pay?

  2. Money subtracted from your gross pay for taxes by the government, also called payroll taxes: • Federal Taxes • State Taxes • FICA (Social Security and Medicare) REQUIRED DEDUCTIONS

  3. USED TO: • Provide for national programs such as: • Defense • Foreign Affairs • Community Development • Law Enforcement • Interest on National Debt Federal Income Taxes:money paid to the government on any income you receive.

  4. 2 Types: Payroll Taxes: money taken from employee paychecks and given to government for income tax. Based on employee earnings. • Social Security Taxes AKA FICA • (Federal Insurance Contributions Act) • Provide benefits for retired workers/dependents • Provide benefits for disabled workers/dependents • Medicare Taxes • Medical benefits for individuals when they reach age 65

  5. FEDERAL TAXES REQUIRED DEDUCTIONS • The amount subtracted from gross pay for taxes is determined by the federal government and you through your allowances, W4. • It is a percentage of gross pay based on a person’s total wages and living situation (married, single, children, etc.). • The federal tax deduction is calculated referring to the appropriate tax table or by multiplying the government determined federal tax rate (from tax table) by gross pay.

  6. What is a W4? • Form that employers have you complete when you start a job. Tells them how much to withhold (take out) of your paycheck for taxes. • The amount withheld depends on your income, marital status & withholding allowances • ALLOWANCE– number that reduces the amount of money withheld from your pay. The more allowances you claim, the smaller the amount withheld. • You may claim 1 allowance for yourself, & 1 for your spouse if you are married • You may claim additional allowances for any others you support

  7. Federal Income Tax Activity • Get your workbooks • Turn to page 7

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