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Questions and Answers
What are common payroll deductions in Guam?
What are common payroll deductions in Guam?
What is the method used to tax supplemental wages, such as bonuses?
What is the method used to tax supplemental wages, such as bonuses?
What is the result of subtracting deductions for taxes and other withholdings from gross pay?
What is the result of subtracting deductions for taxes and other withholdings from gross pay?
What is the definition of net pay?
What is the definition of net pay?
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Which of the following is NOT a common payroll deduction in Guam?
Which of the following is NOT a common payroll deduction in Guam?
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What is the first step in calculating net pay?
What is the first step in calculating net pay?
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What is the purpose of calculating net pay?
What is the purpose of calculating net pay?
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What type of deductions might include child support or garnishments?
What type of deductions might include child support or garnishments?
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According to the Fair Labor Standards Act (FLSA), how long are employers required to keep payroll records?
According to the Fair Labor Standards Act (FLSA), how long are employers required to keep payroll records?
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What is the purpose of maintaining accurate payroll records?
What is the purpose of maintaining accurate payroll records?
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What type of deductions can be pre-tax or post-tax?
What type of deductions can be pre-tax or post-tax?
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What is the result of subtracting all mandatory federal and state taxes, voluntary and mandatory deductions from gross pay?
What is the result of subtracting all mandatory federal and state taxes, voluntary and mandatory deductions from gross pay?
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Study Notes
Payroll Deductions in Guam
- Federal and state income taxes, Social Security, and Medicare are common payroll deductions in Guam
- There is no Guam state income tax, but local income taxes may apply based on municipal regulations
- Pre-tax contributions to retirement accounts and health insurance premiums can also be deducted
- Supplemental wages, such as bonuses, are taxed using a percentage method, involving a flat tax rate applied to supplemental earnings
Net Pay Calculation
- Net pay is the actual cash amount an employee receives on their paycheck, after all deductions and taxes are subtracted from gross pay
- Gross pay is the total compensation due to the employee before any deductions
- To calculate net pay, subtract mandatory federal and state taxes, including income tax, Social Security, and Medicare contributions, from gross pay
- Then, subtract any voluntary or mandatory deductions, such as retirement plan contributions, health insurance premiums, and union dues
- Net pay is essential in payroll management, representing the amount of money available to the employee after accounting for all withholdings
Importance of Net Pay
- Understanding how net pay is calculated is crucial for both payroll professionals and employees
- It helps ensure transparency and correctness in the payroll process, enabling employees to verify their paychecks for accuracy
- It fosters trust within the organization
Examples of Deductions
- Federal and state taxes, depending on tax tables and withholding status
- Benefits, such as health insurance and retirement plans, can be pre-tax or post-tax deductions
- Other deductions, including child support, garnishments, or other court-ordered payments
Payroll Record Keeping and Reporting Requirements
- Employers in Guam must comply with both local and federal laws by maintaining accurate records of wages, hours worked, and other employment details
- Records are necessary for the enforcement of labor laws and essential during audits
- Employers must keep records for at least three years, according to the Fair Labor Standards Act (FLSA)
- Records on which wage computations are based, such as time cards and piece work tickets, must be retained for at least two years
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Description
This quiz covers common payroll deductions in Guam, including federal and state income taxes, Social Security, and Medicare, as well as local income taxes and supplemental wages.
