Personal Finance Earning Income Unit PDF

# Personal Finance ## Earning Income Unit 23 Day 4 **Review for Test - Calculator ok for review and test.** ### 1 Charlie works at a retail store earning $13.50 per hour. He works 48 hours this week. Complete the chart to find her gross pay for the week. | Rate | Hours | Pay | |---|---|---| | $1...

# Personal Finance ## Earning Income Unit 23 Day 4 **Review for Test - Calculator ok for review and test.** ### 1 Charlie works at a retail store earning $13.50 per hour. He works 48 hours this week. Complete the chart to find her gross pay for the week. | Rate | Hours | Pay | |---|---|---| | $13.50 | 40 | $540.00 | | $20.25 | 8 | $162.00 | **Total for week:** $702.00 ### 2 Amanda earns $12.20 per hour. She worked 52 hours last week. Find her gross pay. ($12.20) (40) + ($12.20)(1.5)(12) = $707.60 Gross Pay for week ### 3 Steve works for ABC Accounting firm earning an annual salary of $68,000. He is paid weekly. He worked 60 hours last week completing tax returns for clients. Find his gross pay for the week. $68,000 / 52 = $1307.69 ### 4 What is the difference between a pay period and a pay date? * **Pay Period** - Interval of time that you are paid over * **Pay Date** - Date Paid on, Receive $ on this Date ### 5 Give one positive and one negative feature about being a salaried employee. * **Positive:** Pay is same amount each pay date makes it easy to budget & plan. * **Negative:** No extra compensation for any overtime worked. ### 6 According to the Fair Labor Standards Act, overtime is generally paid at least time and a half. This means that overtime is 1.5 times or 150% hourly rate. For each pay rate, determine the overtime rate. | Hourly Rate | Overtime Rate | |---|---| | $15.00 | $22.50 | | $12.00 | $18.00 | | $20.00 | $30.00 | | $18.50 | $27.75 | ### 7 Define the terms: | Pay Period | Definition | Number of Paychecks per Year | |---|---|---| | Biweekly | Every other week | 26 | | Monthly | Every month | 12 | | Weekly | Every week | 52 | | Semimonthly | Twice a Month | 24 | ### 8 Name 5 Statutory Deductions on an Employee's pay stub. Also give an abbreviation for each (several answers) * Federal Tax withholding (FIT WH) * State Tax Withholding (SIT WH) * Social Security (OASDI) * Medicare * CA State Disability Insurance (CASD) ### 9 FICA stands for: Federal Insurance Contributions Act ### 10 What 2 payroll taxes makeup FICA? * Social Security (OASDI) * Medicare ### 11 Social Security is known as Old Age Survivors Disability Insurance - abbreviated OASDI ### 12 What does YTD stand for? Year to Date ### 13 What does statutory mean when we say "statutory deduction"? Statutory - required, written in statute (law/code) ### 14 Identify each below as a voluntary deduction with a V or as a statutory deduction with a S * S Healthcare Deductions * S Retirement Deductions * S State Tax Withholding * S Social Security Tax Withholding * S CA SDI Tax Withholding * V Union Dues (although pressure to pay) * S Medicare Tax Withholding * V Parking Fees ### 15 Francesca works for an internet retail sales company making $43,000 per year. She is paid semi-monthly. Determine her gross pay, statutory deductions, and net pay for each pay period. She filled out her W-4 incorrectly and wrote EXEMPT on Line 40. She also filled out her state withholding form incorrectly stating she is also EXEMPT from state taxes. What does EXEMPT mean? Did not file TR last yr, not required to file this yr. How many paychecks will she receive in a year? 24 Since inc < $12,950 | Gross Pay for the Pay Period | $1791.67 | |---|:---:| | Deductions: | | | Federal Tax Withholding | $111.08 | | State Tax Withholding | $25.98 | | OASDI 6.2% | $ 19.71 | | Medicare 1.45% | $ 156.77 | | CA SDI 1.1% | $ 19.71 | | Total Deductions | $ 156.77 | | Net Pay for the Period | $1634.90 | ### 16 In June Francesca realized that she made the mistake by putting EXEMPT on her W-4. What should she do? Since her income > $14,600 she will be required to file a **TR**. She should immediately file a New W-4 Form without exemption Line Ac. so her employer will withhold taxes (FIT) ### 17 Look at the pay stub and answer the questions after making changes. * What was the employee's Gross Pay for this pay period? * What was the Net Pay Distribution for this pay period? * What is SSA? * How much in total for the year has the employee received as take home pay? * What is her YTD net pay distribution? | Description | Answer | |:---|:---| | What was the employee's Gross Pay for this pay period? | $900.00 | | What was the Net Pay Distribution for this pay period? | $707.25 | | What is SSA? | Social Security | | How much in total for the year has the employee received as take home pay? | $6365.25 | | What is her YTD net pay distribution? | $6365.25 | ### 18 Find the mistake(s) in the Pay stub. Do not include Fed Tax or CA State Tax as mistakes since we do not know the withholding rate & allowances. Use 2024 CA SDI % even though the paystub is for 2015 * CASDI (1.1% of 300 ) slb $9.90 * Total Current Deductions slb $ 192.75 * YTD Deductims alb $ 1734.75 * YTD Net Pay slb $ 6365.25 * Net Pay slb $707.25 ### 19 Look at the paystub for John Doe, if John works 16 hours of overtime, how much will he be paid for his extra hours? **Nothing! Since he is a salaried employee he does not receive pay for any overtime worked.** ### 20 ## SKIP # 20 ### 21 Complete the table below: | Form | Who completes the form? | When is it completed? | What is the purpose of the form? | |---|---|---|---| | I-9 | Employee and Employer | Day 1 of work <br> Day 1 of work | To verify employee's identity and authorization to work in the US. | | W-4 | Employee | anytime a FIT WH | To tell employer how much FIT S/D WH each paycheck. | | W-2 | Employer | by Jan 31st of next year | Summarize Annual Compensation and Deductions reported to IRS SO TPC | ### 22 True or False: | Statement | T or F| |---|---| | Gross Pay - Deductions = Net Pay Distribution | T | | If your fed tax liability was $ 4,000 and you had FIT WH of $180 each paycheck (and you were paid biweekly) then you were under withheld. | F | | An employee completes form W-2 on their first day of work. | F | | Someone with annual gross wages of $ 187,000 and someone with annual gross wages of $ 168,600 will have the same OASDI for 2024 (Note: There is a cap on DASDI wages $168,600) | T | | If you are self-employed then you must pay twice the amount of FICA taxes as an employee. | T | | When completing her 1-9 on the first day of her new job, Sasha correctly showed her new employer her driver's license to verify her identity and authorization to work in the U.S. She needed doc. to verify work. | T | | If you have wages from one job $12,550 and wages from another job $5000 you are NOT required to file a TR. | F | | If you are over withheld on your federal taxes, then the government will automatically credit your OASDI for the amount you over withheld for FIT. You must file TR + request refund for FIT. | F | | DASDI and FIT are different. | T | ### 23 Given the following information, complete the table below, make a paystub and W-2 for Stu Johnston. | Description | Employer | Employee | Annual Salary | Current Pay period | Pay Date | |---|---|---|---|---|---| | Company Name and Address | Technocraze <br> 3 Stevens Creek Blvd <br> Cupertino, CA 95014 | Stu Johnston <br> 14 Goldenview <br> Cupertino, CA 95014 | $84,000 | September 16-30, 2024 | September 30, 2024 | | FEIN | 44-9999884 | 123-45-6789 | Paid Semimonthly (24) | | 18th Payck of yr. | | CA ID | 998875 | Employee ID #: 2345 | Paid on the 15nd and the 30th of each month | | | | Federal Income Tax W/H per paycheck | $300 | $150 | Current 18 | current 24 | | | Description | Current Amounts | YTD Amounts | Annual Amounts | |---|---|---|---| | Gross Pay | $3,500.00 | $ 63,000.00 | $ 84,000.00 | | Deduction: | | | | | Federal Tax Withholding | $ 300.00 | $ 5,400.00 | $ 7,200.00 | | State Tax Withholding | $ 150.00 | $ 2,700.00 | $ 3,600.00 | | OASDI 6.2 % | $ 217.00 | $ 3,906.00 | $ 5,208.00 | | Medicare 1.45 % | $ 50.75 | $ 913.50 | $ 1,218.00 | | CA SDI 1.1 % | $ 38.50 | $ 693.00 | $ 924.00 | | Total Deductions | $ 756.25 | $ 13,612.50 | $ 18,150.00 | | Net Pay | $ 2743.75 | $ 49,387.50 | $ 65,850.00 | ### 24 A person has gross wages of $97,000 and contributes 20% of gross wages to his 401(k). Calculate the W-2 items: * Gross Wages: $97,000 * 401(k) contributions: (97,000)(.20) = $19,400 * Box 1 Wages on W-2: $ 77, 600 = 97000 - 19,400 * Box 12d on W-2: $ 19,400 (These are contributions to 401K Give 2 benefits of making contributions to your company's 401(k) plan. * Contributions reduce taxable wages - Pay Less Income Tax (Fed & State) * Earnings grow tax free - often company will match a portion of your contributions! ### 25 Review the items allowed as documentation for Form I-9. Write down 2 "common" items from each list. **List A** * US Passport * Permanent Resident Card or Alien Reg. Card * Foreign Passport with Stamp... * Others... **List B** * Driver's License / IDcard * ID card issued by Fed Gov't, state, local w/ photo * School ID * Voter card * Military card * Tribal DOC.... others **List C** * SS card w/ info... * Birth Certificate * Tribal Document * Others... You must present 1 item from List A or 1 item from List B and 1 item from List C. * **List A documents verify identity** * **List B documents verify identity and verifies authorization to work** * **List C documents verify authorization to work** ### 26 Calculate total FICA taxes for gross wages of $80,000. Show your work. * $80,000 Gross wages * OASDI = 180,000) (.062) = $4960 * Medicare = (80,000) 1.0145) = $1160 * Total FICA Employee = $6120 * Note: Employer matches $6120 * Both $ sent to Govt. ### 27 Calculate total FICA taxes for gross wages of $200,000. This is tough! Look at the notes for threshold amounts. * $ 200,000 Gross wages * OASDI Threshold $ 168,600: ($168,600) (.062) = $10.453.20 * Medicare. Threshold $ 200,000 : ($200,000) (.0145)= $2900.00 * Additional Medicare for wages > $200,000 = $2900.00 + 2900(.25) = $13,353.20 * FICA Taxes paid by Employee = $ 13,353.20 ### 28 A person has gross wages of $97,000 and contributes 20% of gross wages to his 401(k). Calculate the W-2 items: * Gross Wages: $97,000 * 401(k) contributions: (97,000)(.20) = $19,400 * Box 1 Wages on W-2: $ 77, 600 = 97000 - 19,400 * Box 12d on W-2: $ 19,400 (These are contributions to 401K Give 2 benefits of making contributions to your company's 401(k) plan. * Contributions reduce taxable wages - Pay Less Income Tax (Fed & State) * Earnings grow tax free - often company will match a portion of your contributions!