Working and EarningEarning Statements

• Key Ideas• Employment provides a means of creating

personal income• Employee earning statements include

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

deductions

• Overview Information• Employees are able to monitor their salaries

through the information provided on their earning statements

• provided each time an employee is paid (usually on a bi-weekly or monthly basis)

• includes information about hours worked, gross vs. net income, deductions, etc.

Gross vs. Net Income

• “gross” income is……..• the total amount of money an individual

makes before deductions• “net” income is………• the total amount of money that an employee

actually gets after deductions• Net income is also called…• “Take Home Pay”

• Gross is usually reflected in a general salary or hourly figure –Pete earns a salary of $45,000/year– Sarah earns $13.50/hour–Neither or these employees “takes home”

that full amount

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

pay for different purposes• 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

• 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)

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• Savings 120• ------------------------------------------------------------• $2292

Not taxed on this income earned