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

Last updated 12 months ago
39 questions

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.
Required
10

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

Required
10

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

Types of Income

You can earn money in a lot of different ways. Read the article about types of income and answer the questions.
Required
10

What is the main difference between salary and wage work?

Required
10
What are two ways that you can earn income without working?

1._______

2._______

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.
Required
10

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

Required
5

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

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.
Required
5

What are payroll deductions?

Required
5

Which deductions will everyone see on their paycheck?

Required
10

Why might someone voluntarily have money deducted from their paycheck?

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.


Required
3

What is the difference between gross pay and net pay?

Required
3

What are pre-tax deductions and contributions?

Required
3

What are two examples of Employer Contributions?

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
Required
5

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

Required
5

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

Required
10

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

Remember that percentages are calculated by:


so for this problem:


Required
5

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

Required
10

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

Required
10

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

Remember that percentages are calculated by:


so for this problem:


Required
10

What percentage of total deductions were voluntary deductions?

Remember that percentages are calculated by:




so for this problem:


Required
10

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:


EXIT TICKET

Required
3

A W-4 is…

Required
5

A FICA withholding on your paystub is…

Required
5

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.

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.
Required
10
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

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.

Required
5

What is Maxwell’s filing status?

Required
3

Based on the information provided on this W-4 form, which statement can you assume is TRUE?

Required
3

In order to fill out this W-4 form, Maxwell needed to know all of this information EXCEPT…

Required
5

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?

Required
5

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

Required
5

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?

Required
5

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

Required
3

When Maxwell completes this W-4, who should he submit it to?

Required
10

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

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:


Required
10

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:

Required
10

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

Required
10

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:


Required
10

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.
Required
5

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?

Required
5

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?