15 income earning and reporting

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  • 1. Personal choices about investment in oneself as human capital through education, training, and skill development impact earnings.
  • 2. Knowledge and skills a person possesses
  • 3. People invest in their own human capital when they gain knowledge and skills through education, training, and experience
  • 4. People with more education and skills tend to earn higher incomes than uneducated and unskilled workers.
  • 5. People can receive income from a variety of sources
  • 6. Earned: Unearned: Salary Interest Hourly wages Return on investment Overtime Inheritance Tips gifts Commissions Bonuses Piece rate
  • 7. Net pay is what remains after voluntary and required deductions are subtracted from gross pay
  • 8. Total money earned before deductions Some deductions are required Some may be voluntary
  • 9. Net pay results when deductions such as the following are subtracted from gross pay: Federal Insurance Contributions Act (FICA) contributions State and Federal Taxes Insurance Savings Retirement Medical reimbursement (pre-tax deduction) Child care reimbursement
  • 10. Employees may have a variety of benefits and incentives to consider
  • 11. Benefits are part of an employees compensation, over and above wages or salary. They add to the financial value of the job Examples of benefits: Matching contributions to tax-sheltered annuities, such as 401(k) and 403(b) retirment savings plans Savings plans Parking Health insurance plans (medical, dental) Child care Elder care Paid vacation Paid sick days Profit sharing
  • 12. Incentives are offered as motivation for employees to perform well and may include: Bonuses Profit sharing Free travel or merchandise
  • 13. The information a worker provides on the W-4 form impacts federal tax deductions and personal income
  • 14. The information provided on the W-4 form determines how much is withheld from ones gross pay.