Part 1: Earning Statements

Working and EarningEarning Statements

• Key Ideas• Employee earning statements include

information about……………….• gross wages, benefits, taxes and other

deductions• Gross vs. Net – define? • Take home pay

Deductions• Define….• money that is taken out of an employees gross

pay for different purposes

• Example: Pete earns a salary of $45,000/year and gets paid every 2 weeks. Then, money is deducted for

• health insurance ($100/pay)• 401k (10% of gross)• Social Security (7% of gross) • federal income tax (20% of gross)• state income (4% of gross) • local income taxes (2% of gross)

DeductionsOther Examples:– health insurance (medical, dental, vision)– retirement contributions– annuities/loan payments– garnishment (for unpaid child support, owed back

taxes, etc.)– taxes - federal, state and local• Social Security, federal income, state income, local

income

Deductions Deduction Amount Gross Income $45,000

Health Ins ($100 per pay)

401 k (10% of gross)

Social Securtity (7% of gross)

Fed.Income Tax (20% of gross)

State Income Tax (4% of gross) Local Income Tax (2% of gross) Total Deductions

Deductions Deduction Amount Gross Income $45,000

Health Ins ($100 per pay) $2,400

401 k (10% of gross) $4,500

Social Securtity (7% of gross)

$3,150

Fed.Income Tax (10% of gross)

$4,500

State Income Tax (2% of gross)

$900

Local Income Tax (1% of gross)

$450

Total Deductions $15900

Net Income =$29,100

I HAVE NOT EATEN YET!

= 64.6 % of Gross Income

• Pay Check Deductions • Federal Income Tax 720• State Income Tax 220• City Income Tax 140• Medicare 50• STRS 700• Health 120• Dental 6• Vision 1• Union 15• 403 B 200• Credit Union 120• ------------------------------------------------------------• $2292

Not taxed on this income earned