Net Pay

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Chapter 2

• Net Pay

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2.1 Deductions from Gross Pay
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• Deductions subtractions from gross pay (ex
  taxes, insurance, social security)
• Withholding Taxes federal, state local taxes
  withheld from check by employer
• Withholding Allowance based on wage, marital
  status, of dependents is used to reduce
  amount of taxes withheld
• (practice using tax tables p. 41 in textbook)

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FICA social security medicare deduction (used
for disability, medicare, retirement, survivors)

• Only paid on up to 87,900 at 1 job
• If earn more than 87,900 at more than 1 job,
  each employer takes out percentage
• FICA Rates

6.2 for social security 1.45 for
medicare 7.65 total withheld for FICA
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Example 1

• Find the total FICA tax on incomes of
• 35,000
• 80,000
• 92,000.

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Net Pay amt of pay after all deductions

• Example
• Mary Mendosa earned gross pay of 426 last week.
  Federal withholding taxes of 40, social security
  taxes of 6.2, Medicare taxes of 1.45, health
  insurance premiums of 45.80, and union dues of
  12.56 were deducted from her gross pay. Find
  Marys net pay

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Wrap It Up