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Do Now…. Carl worked 12 hours for an hourly rate of $7.50 The Federal Tax Rate is 20% The State Tax Rate is 10% FICA is always 7.65% What is Carl’s Net Pay?. Computer Whiz Carl works at Circuit City. I think I know, check my answer. Click here is your answer was correct.

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do now
Do Now…
  • Carl worked 12 hours for an hourly rate of $7.50
  • The Federal Tax Rate is 20%
  • The State Tax Rate is 10%
  • FICA is always 7.65%
  • What is Carl’s Net Pay?

Computer Whiz Carl works at Circuit City.

I think I know,

check my answer

slide2

Click here is your answer was correct.

Oops, I guess I need help.

Click here.

Carl’s Net Pay is $56.11

slide3

Carl’s Net Pay

  • Carl’s Gross Pay is $90.00
      • $7.5 x 12 hours = $90.00
  • His Federal Tax Deduction is $18.00
      • $90.00 x 20% = $18.00
  • His State Tax Deduction is $9.00
      • $90.00 x 10% = $9.00
  • His FICA Deduction is $6.89
      • $90.00 x 7.65% = $6.89

$90.00 - $18.00 - $9.00 - $6.89 = $56.11

Carl’s Net Pay is $56.11

required deductions

Money subtracted from your gross pay for taxes by the government, also called payroll taxes:

    • Federal Taxes
    • State Taxes
    • FICA (Social Security and Medicare)

REQUIRED DEDUCTIONS

calculating federal tax deduction

NEXT

  • Johnny’s Gross Pay is $50.00
  • Johnny’s Federal Tax Rate is 20%
  • Johnny’s Federal Tax Deduction is $10.00

Calculating Federal Tax Deduction

$50.00 x 20% = $10.00

$50.00 x .20 = $10.00

Gross Pay x Federal Tax Rate = Federal Tax Deduction

diligent david s gross pay is 48 00

I think I know,

check my answer

The Federal Tax Rate is 20%

Diligent David’s Gross Pay is $48.00

What is David’s Federal Tax Deduction?

Show me how to determine David’s federal tax deduction

slide8

20% or .20 means

20¢ out of every dollar earned,

goes to Uncle Sam.

}

20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+

20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+

20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+

20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+

20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+

20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢+ 20¢

$9.60

There are additional deductions to be subtracted from gross pay, let’s calculate State Taxes and FICA…

required deductions1

STATE TAXES

REQUIRED DEDUCTIONS

  • The amount subtracted from gross pay for taxes is determined by the state government.
  • It is a percentage of gross pay based on a person’s total wages and living situation (married, single, children, etc.).
  • The state tax deduction is calculated by multiplying the government determined tax rate by gross pay.
calculating state tax deduction

NEXT

Calculating State Tax Deduction

  • Johnny’s Gross Pay is $50.00
  • Johnny’s State Tax Rate is 15%
  • Johnny’s State Tax Deduction is $7.50

$50.00 x 15% = $7.50

$50.00 x .15 = $7.50

Gross Pay x State Tax Rate = State Tax Deduction

diligent david s gross pay is 48 001

The State Tax Rate is 18%

Diligent David’s Gross Pay is $48.00

What is David’s State Tax Deduction?

I think I know,

check my answer

Show me how to determine David’s state tax deduction

slide13

18% or .18 means

18¢ out of every dollar earned,

goes to Uncle Sam.

}

$48.00 x 18%

OR

$48.00 x .18

$8.64

There is one more deduction to be subtracted from gross pay, let’s learn about FICA…

required deductions2

FICA

REQUIRED DEDUCTIONS

  • FICA stands for Federal Insurance Contributions Act. This law was created to pay for Social Security and Medicare.
    • Social Security – Wages paid to retired people by the government based on how much they earned during their working years.
    • Medicare – Government sponsored health insurance for retired people.

The amount subtracted from gross pay for FICA is always at a rate of 7.65% (6.2% for Social Security and 1.45% for Medicare)

calculating fica deduction

Calculating FICA Deduction

  • Johnny’s Gross Pay is $50.00
  • The FICA Rate is 7.65%
  • Johnny’s FICA Deduction is $3.83

$50.00 x 7.65% = $3.83

$50.00 x .0765 = $3.83

Gross Pay x FICA Percentage = FICA Deduction

diligent david s gross pay is 48 002

Diligent David’s Gross Pay is $48.00

What is David’s FICA Deduction?

I think I know,

check my answer

Show me how to determine David’s FICA deduction

david s fica deduction is

Click here is your answer was correct.

Oops, I guess I need help.

Click here.

$3.67

David’s FICA Deduction is

After all these deductions, is there any money left for me?

slide18

$48.00 x 7.65% = $3.67

$48.00 x .0765 = $3.67

slide19

After all these deductions, is there any money left for me?

NET PAY = the money left after all deductions are subtracted from gross pay.

slide20

Calculating Net Pay:

the money after deductions, what you actually bring home…..

  • Johnny’s Gross Pay is $50.00
  • Johnny’s Federal Tax Deduction is $10.00
  • Johnny’s State Tax Deduction is $7.50
  • Johnny’s FICA Deduction is $3.83

$50.00 - $10.00 - $7.50 - $3.83 = $28.67

Gross Pay - Federal, State and FICA Deductions = Net Pay

what is diligent david s net pay

What is Diligent David’s Net Pay?

  • His Gross Pay is $48.00
  • His Federal Tax Deduction is $9.60
  • His State Tax Deduction is $8.64
  • His FICA Deduction is $3.67

I think I know,

check my answer

Show me how to determine David’s Net Pay

slide22

Click here is your answer was correct.

Oops, I guess I need help.

Click here.

David’s Net Pay is $26.09

He will have $26.09 to spend after all required deductions have been subtracted from his gross pay.

slide23

NEXT

David’s Net Pay

  • David’s Gross Pay is $48.00
      • $8.00 x 6 hours = $48.00
  • His Federal Tax Deduction is $9.60
      • $48.00 x 20% = $9.60
  • His State Tax Deduction is $8.64
      • $48.00 x 18% = $8.64
  • His FICA Deduction is $3.67
      • $48.00 x 7.65% = $3.67
slide24

Gross Pay - Federal Tax - State Tax - FICA = Net Pay

$48.00 - $9.60 - $8.64 - $3.67 = $26.09

David’s Net Pay =

$26.09