Section 2-6 Statement of Earnings

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Section 2-6Statement of Earnings
Presented by M J Lund
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Review of Income Tax and the W-4 form

• http//www.irs.ustreas.gov/app/understandingTaxes/
  jsp/hows/tt/module01/tax_mod1_1.jsp

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Net pay is the amount of moneyyou actually take
home afteryour deductions. What are some of the
deductions (withholdings) we have discussed in
this unit?
State Income Tax
Federal Income Tax
Insurance Coverage
FICA
Social Security and Medicare
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Statement of Earnings

• Information on your pay stub.
• Shows all of your deductions.
• To find net pay. Add together all of your
  deductions and subtract that amount from the
  total pay.

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(No Transcript)
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Example 1

• Mary North earns 785 a week. She is single and
  claims one allowance . She pays 6.2 for Social
  Security and 1.45 for Medicare. The state she
  lives in has a 2 state tax on gross pay. Also,
  25 is deducted each week for health care. Find
  her net pay. (Dont forget the Federal Tax
  deduction.)

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Answer Example 1

• Mary North earns 785 a week. She is single and
  claims one allowance. She pays 6.2 for Social
  Security and
• 1.45 for Medicare. The state she lives in has a
  2 state tax (based on gross pay). Also, 25 is
  deducted each week for health care. Find her net
  pay. (Dont forget the Federal Tax deduction.)

Earns 785 a week - total deductions net pay
Total deductions Social Security 0.062 x
785 48.67
Medicare 0.0145 x 785 11.38
State Tax 0.02 x
785 15.70
Federal Tax 115.00
Health Care 25.00 215.75
785.00 - 215.75 569.25
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Example 2

• Jim West earns 956 a week. He is married and
  claims 2 allowances. He pays 6.2 for Social
  Security and 1.45 for Medicare. The state he
  lives in has a 3 state tax on gross pay. Also,
  110 is deducted each week for health care. Find
  his net pay. (Dont forget the Federal Tax
  deduction.)

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Answer Example 2

• Jim West earns 956 a week. He is married and
  claims two allowances. He pays 6.2 for Social
  Security and
• 1.45 for Medicare. The state he lives in has a
  3 state tax (based on gross pay). Also, 110 is
  deducted each week for health care. Find his net
  pay. (Dont forget the Federal Tax deduction.)

Earns 956 a week - total deductions net pay
Total deductions Social Security 0.062 x
956 59.27
Medicare 0.0145 x 956 13.86
State Tax 0.03 x
956 28.68
Federal Tax 96.00
Health Care 110.00 307.81
956.00 - 307.81 648.19
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Example 3

• Don East earns 750 a week. He is married, has
  one child, and claims 4 allowances. He pays
• 6.2 for Social Security and 1.45 for Medicare.
  
• The state he lives in has a 3 state tax on gross
  pay. Also, 150 is deducted each week for health
  care. Find his net pay.
• (Dont forget the Federal Tax deduction.)

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Errors Example 3

• Don East earns 750 a week. He is married, has
  one child and claims 4 allowances. He pays 6.2
  for Social Security and 1.45 for Medicare. The
  state He lives in has a 3 state tax on gross
  pay. Also, 150 is deducted each week for health
  care. Find his net pay.
• (Dont forget the Federal Tax deduction.)

Earns 750 a week - total deductions net pay
Total deductions Social Security 0.062 x
750 46.50
Medicare 0.0145 x 750 10.87
State Tax 0.3 x 750
225.00
Federal Tax 57.00
Health Care
150.00 489.37
The regular office person who calculates the pay
is out this week. Her Replacement is confused.
Find the errors she made.
750.00 - 489.37 1239.37
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Errors (in white) Example 3

• Don East earns 750 a week. He is married, has
  one child and claims 4 allowances. He pays 6.2
  for Social Security and 1.45 for Medicare. The
  state He lives in has a 3 state tax on gross
  pay. Also, 150 is deducted each week for health
  care. Find his net pay.
• (Dont forget the Federal Tax deduction.)

Earns 750 a week - total deductions net pay
Total deductions Social Security 0.062 x
750 46.50
Medicare 0.0145 x 750 10.88 3 not
30 State Tax 0.3
x 750 22.50 4 allowances not 3
Federal Tax 48.00
Health Care
150.00 277.88
750.00 - 277.88 472.12
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Assignment

• Hmk pg 130 3-7