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5.4 Taxes Your Paycheck (Due 1/26/23)

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Last updated over 1 year ago
39 questions
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In this activity you will learn the basics about paychecks and paystubs.


Complete this activity and use complete sentences for full credit.

Day 1 1/23/23

That's Gross!

In this video, Yanely discusses your paycheck and why it’s so important for you to understand how to read it. After watching the video, answer the questions below.
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Types of Income

You can earn money in a lot of different ways. Read the article about types of income and answer the questions.
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Filling Out the W-4 Form

A W-4 form is completed when you start a new job so that your employer knows how to calculate your federal tax withholdings. Watch the video about completing a W-4 and use it to answer the questions.
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What are Payroll Deductions?

There are many different types of payroll deductions. Some are required while others are voluntary. Read the article and use it to answer the questions about payroll deductions.
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Day 2 1/24/23

How to Read a Pay Stub

A pay stub details your earnings, taxes, voluntary deductions, and many pieces of important information. Watch this video to learn more about how to read a pay stub. Then, answer the questions either in EdPuzzle or below.


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EXIT TICKET

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Day 3 1/25/23

COMPARE: Tax Forms and Their Purpose

All the forms in your taxes contain so many letters and numbers that it can be hard to keep them straight. Match the tax forms (in the bank at the bottom) with their descriptions.
Question 24
24.

FINE PRINT: W-4 Form

In this activity, you will explore a W-4 in more detail to understand its various components. Then, you will answer questions using the sample W-4 below.


Part I: Read The Fine Print

Analyze this sample W-4 and answer the questions that follow.

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Day 4 1/26/23

Calculating Taxes

Payroll taxes are taxes paid on the wages and salaries earned by employees. The two most common federal payroll taxes support Social Security and Medicare and can be known as the Federal Insurance Contributions Act (FICA) and Medicare Federal Insurance Contributions Act (MEDFICA). Social Security and Medicare are both social insurance programs, providing support to eligible Americans.

Here is how payroll taxes are collected:


Question 34
34.

Dynasti is an employee of Swifty Car Wash, Inc in their corporate legal department. Her annual salary is $114,800.

How much will Dynasti pay in Social Security taxes this year? (Your answer should have only two decimal places because it is money after all.)



Remember that you need to find out what percentage of her income will be deducted Do this by determining which percentage you will need for your calculation. Then remember that to find a percentage of a total you need to use this formula:

Question 35
35.

Dynasti is an employee of Swifty Car Wash, Inc in their corporate legal department. Her annual salary is $114,800.

How much will Swifty Car Wash contribute to Medicare for Dynasti’s salary? (Your answer should have only two decimal places because it is money after all.)



Remember that you need to find out what percentage of her income will be deducted Do this by determining which percentage you will need for your calculation. Then remember that to find a percentage of a total you need to use this formula:


Normal Deductions

Question 36
36.

Nolan works part-time at a movie theater making his state’s minimum wage of $10.10 per hour. He receives a paycheck every 2 weeks.

If he works 20 hours over the course of the first two weeks in February, how much should he expect to have taken out of his paycheck for payroll taxes?

Remember that you need to find out what percentage of his income will be deducted. Do this by determining which percentage you will need for your calculation. Then remember that to find a percentage of a total you need to use this formula:


Question 37
37.

Nolan works part-time at a movie theater making his state’s minimum wage of $10.10 per hour. He receives a paycheck every 2 weeks.

The second half of February is much busier with local schools closed for the entire week of Presidents Day, and Nolan’s boss schedules him for 27 hours instead. Other than payroll taxes, Nolan doesn’t have any other money withheld from his paycheck. How much can he expect his take-home pay to be? Note: Take-home pay is gross earnings minus any deductions.

Remember that you need to find out what percentage of his income will be deducted. Do this by determining which percentage you will need for your calculation. Then remember that to find a percentage of a total you need to use this formula:


Payroll taxes are shared by traditional employees and their employers. Alternatively, if you are self-employed, which includes gig workers or those with a side hustle, you have to pay the employer’s portion as well as the employee’s portion. These taxes are then called Self-Employment Contributions Act (SECA) taxes, which are taxed at the rates shown below:


In addition to a full-time job at Swifty Car Wash, Dynasti also has a side-gig selling elaborate, expensive birthday cakes to customers within a 50-mile radius of her home. She’s using her profits to pay down law school loans more quickly.
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Question 1
1.

What type of information should you see when you look at your paystub?

Question 2
2.

Why is it important for you to understand how to read your pay stub?

Question 3
3.

What is the main difference between salary and wage work?

Question 4
4.
What are two ways that you can earn income without working?

1._______

2._______
Question 5
5.

What steps of the W-4 are required for every employee?

Question 6
6.

Which step must you fill out if you have multiple jobs?

Question 7
7.

What are payroll deductions?

Question 8
8.

Which deductions will everyone see on their paycheck?

Question 9
9.

Why might someone voluntarily have money deducted from their paycheck?

Question 10
10.

Question 11
11.

Question 12
12.

MATH CONNECTION - ANALYZING PERCENTAGES

Now that we understand how to read a pay stub and the types of deductions that might show up, let’s do some analysis to see how much of our gross pay is being deducted.

Carl’s Paycheck
Question 13
13.

What was Carl’s gross pay for the current pay period?

Question 14
14.

How much did Carl pay in taxes during the current pay period?

Question 15
15.

What percentage of Carl’s total gross wages was paid in taxes?

Remember that percentages are calculated by:


so for this problem:


Question 16
16.

How much did Carl pay in FICA Social Security taxes during the current pay period?

Question 17
17.

What percentage of total taxes was paid in FICA Social Security taxes?

Remember that percentages are calculated by:




so for this problem:


MATH CONNECTION - ANALYZING PERCENTAGES part 2

Now that we understand how to read a pay stub and the types of deductions that might show up, let’s do some analysis to see how much of our gross pay is being deducted.

Alan’s Paycheck

Question 18
18.

What percentage of Alan’s gross income was deducted for health insurance?

Remember that percentages are calculated by:


so for this problem:


Question 19
19.

What percentage of total deductions were voluntary deductions?

Remember that percentages are calculated by:




so for this problem:


Question 20
20.

What percentage of Alan’s gross pay did he take home after all deductions?

Remember that percentages are calculated by:




  1. so for this problem:


Question 21
21.

Question 22
22.

A FICA withholding on your paystub is…

Question 23
23.

You made $1,265.00 in gross pay this pay period. Your net pay was $963.50. What percentage of your gross pay was withheld from your paycheck for taxes and voluntary deductions? Round to the nearest whole percentage.

1040
W-2
W-4
I-9
Received in January
Completed by April
Completed right before you start a job
Determines how much is deducted from a paycheck
Needs an ID to be completed
Tells you how much you earned and how much you paid in taxes
You need to fill this out for every job you work
Used to see if you owe or are owed taxes at the end of each year you work
Question 25
25.

What is Maxwell’s filing status?

Question 26
26.

Question 27
27.

Question 28
28.

Assume that Maxwell and his spouse anticipate earning around $110,000 in combined income this year. Given how he’s completed this W-4 form, how many children under the age of 17 does Maxwell have?

Question 29
29.

Given how he’s completed this W-4 form, how many other dependents does Maxwell have?

Question 30
30.

If Maxwell and his spouse were to have another child, but all other aspects of their life stayed the same, which entries on a new W-4 form would he need to change?

Question 31
31.

How much EXTRA money is Maxwell having held from each paycheck?

Question 32
32.

Question 33
33.

Why is it extremely important to read the fine print of your W-4 form?

Question 38
38.

In June, one of her busiest months, Dynasti sells 7 cakes, collecting a total of $795 from her customers. How much does she need to pay for her SECA taxes?

Question 39
39.

After reading more about self-employment taxes, Dynasti realizes she can deduct the cost of the ingredients she used to bake the cakes before she determines how much tax she owes! If ingredients for those 7 cakes cost a total of $82, how much does Dynasti actually owe for SECA?

What is the difference between gross pay and net pay?
Net pay is before taxes and deductions are subtracted; Gross pay is your take-home pay
Gross pay is before taxes and deductions are subtracted; Net pay is your take-home pay
There is no difference between gross and net pay
What are pre-tax deductions and contributions?
Contributions taken out of your paycheck AFTER taxes are calculated on your income
Contributions taken out of your paycheck BEFORE taxes are calculated on your income
What are two examples of Employer Contributions?
Traditional & Roth IRA
401k & Roth IRA
Health Insurance & 401k
A W-4 is…
A document that you receive from the federal government detailing total taxes owed for the year
A form you fill out so that your employer can calculate how much to withhold in taxes from your paycheck
A document used to calculate retirement and health insurance withholding
A summary of your gross vs net pay including current pay periods and year to date withholdings
Based on the information provided on this W-4 form, which statement can you assume is TRUE?
Maxwell and his spouse are planning to itemize their deductions this year
Maxwell and his spouse are the owners of Big City Office Furniture
Maxwell and his spouse both work at Big City Office Furniture
Maxwell and his spouse both work, or Maxwell himself has two jobs
In order to fill out this W-4 form, Maxwell needed to know all of this information EXCEPT…
His address
His Social Security number
The number of dependents he plans to claim on his tax return
The amount of taxes he’s paid in the last five years
When Maxwell completes this W-4, who should he submit it to?
Big City Office Furniture
No one - he keeps it for his records
The IRS
His spouse