Types of Pay
Salary – set amount of money earned by an employee per year or other fixed length of time A portion of the salary
is paid at regular intervals
Each paycheck represents the salary divided by the number of pay periods
How much would each paycheck be?
$60,000 paid monthly =
$26,000 paid biweekly =
$30,000 paid on 1st & 15th =
Types of Pay
Wages – employee earnings that are paid by the hour, day, or item
Piecework – work for which wages are based on the number of items or pieces produced
How much would each paycheck be?
$7.50 per hour/ 40 hours
$16.00 per hour/ 80 hours
1000 pieces @ $.25/piece
Types of Pay
Commission – fixed percentage or amount of profit given to an employee for making a sale Some earn an hourly
wage also
What are some jobs that
are paid by commission?
How much would each paycheck be?
$15,000 in sales/10% Commission =
40 hours @ $5.00/hour +
$20,000 sales/5% commission =
Types of Pay
Tips – money given to an employee by customers in exchange for a service Most workers earn a
small hourly wage
List some jobs that work for tips.
Bonus – sum of money paid to an employee in addition to regular pay Christmas Reach safety goal Reach sales goal
Fair Labor Standards Act (FLSA)
Equal Pay The Fair Labor Standards Act includes
equal pay provisions that forbid employers for paying one person less than another person for the same work.
Fair Labor Standards Act (FLSA)
Minimum wage – lowest hourly rate an employer may legally pay most workers Raised periodically ($7.25)
Subminimum wage – set lower that the standard wage Full-time students Employees younger than 20 Employees who are developmentally
disabled
Types of Benefits
Insurance Savings and
Retirement Usually pre-tax Match program
Paid holidays Paid vacations Sick leave Additional
Education
Employment Classifications
Full-time – hold wage or salary positions of at least 35 hours per week, take part in employer sponsored benefit programs, tend to earn higher wages that employees working in other classifications
Part-time – employees who work less than 35 hours per week, may or may not be eligible for benefits
More Employment Classifications
Temporary – fill temporary vacancies or to help with additional work, do not receive benefits
Contract – hired for a specified period of time to complete a particular job
Challenge
You are trying to decide between two summer jobs. One pays $2 an hour above minimum wage and guarantees at least 25 hours per week, with up to 40 hours possible in busy periods. The other job pays $2 less than minimum wage. However, you’ll receive tips and can work as many or as few hours as you wish. Explain how you would compare the income potential of the two jobs? What else would you take into consideration and why?
How Employees are Paid
Weekly Every two weeks Once a month Twice a month
Direct deposit – pay is electronically transferred directly into the recipient’s bank account
Information on a Pay Stub Identification
Name, address, pay period, employee id
Earnings Number of hours
worked, Pay rate, Year to date
Gross pay – total amount of money earned during pay period
Deductions – anything that is subtracted from gross pay Taxes▪ Federal Withholding▪ Social Security▪ Medicare
Benefits▪ Insurance (health, life)▪ Retirement
Net pay – amount of pay after taxes and deductions
Income Tax Responsibilities Income tax is the largest source of
money used by the federal government to provide services to its citizens
How do you fulfill your responsibility to pay income taxes? Complete a form that allows your employer
to withhold income taxes for your pay. (W-4) File a tax return at least once a year and
pay any additional taxes owed.
Income Tax Withholding
Your employer will withhold, or take out, income taxes for every paycheck and send to the government.
Form W-4 Personal Information Exempt status Allowances
Form W-4
Personal Information Name Address Social Security
number Marital Status
Exempt Status Expect to earn to little
income Didn’t have to pay
taxes the previous year
Allowances – factors that affect the amount of income tax withholding The more allowances
you claim, the less tax your employer will take out
You should not claim more allowances than allowed, but you may claim less
Get Ready for Tax Time
File a tax return
Actual earnings Calculate tax owed Compare to tax
withheld▪ Pay difference▪ Refund
Internal Revenue Service (IRS)
April 15
What do you need? Form W-2▪ Wage and Tax
Statement▪ Sent by January 31
Form 1099 IRS instruction bookl
et and forms▪ Post Office▪ Library▪ Online
Personal Records
Completing Your Tax Return Filing status Exemptions
Dependent – someone who is supported by a tax payer’s income
Income Deductions
Tax deduction – reduces the amount of income that is taxed
Itemized deductions – amount actually spent on tax-deductible expenses
Standard deduction – set amount the IRS allows you to deduct without listing actual expenses
Taxable income Tax Owed Tax Credits – subtracted directly from the amount of tax
owed Final calculations