Name: ____________________________________ Career Experience Program Curriculum
Date: _______________________
UNDERSTANDING YOUR PAYCHECKS AND READING W-2’S Some people get paid hourly, salaried, piecework, some monthly, bi-monthly or commissioned. What you earn is between you and your employer and should remain confidential. Most deductions are pre-taxed which means the money is taken out of your gross pay, leaving you with net pay. Your employer is legally responsible for withholding taxes and submitting them to federal and local government agencies. Your paystub should show your name, social security number, and other identifying information and contains an itemized listing of your gross pay, deductions and your net pay. You will receive a W-2 form at the end of the year, or by January 31st of the following year, at the latest. If you have not received your W-2, contact your employer, as they are required by law to provide your W-2 by this date. The W-2 form lists your total pay and taxes withheld for the previous calendar year. You need this form to prepare your income taxes. It shows how much money you earned and how much your employer withheld for taxes. Report any discrepancies to your payroll office so your employer can make the necessary corrections. If you have not received your W-2 in time to do this assignment, use your final pay stub that includes “year to date figures”. You will be able to complete this assignment using that information. Discuss with your instructor before due date of assignment. A copy of Lisa Michaels’ paystub is provided below. Her gross pay (total amount earned) is listed as regular earning. Her net pay (sometimes called take-home pay) is the amount that remains after money has been deducted for various taxes.
Taxes/ Deductions Date Federal Year to Date
Michaels, Lisa 0987425143 (Statement of Earnings and Deductions.) Detach and Retain FOR YOUR RECORDS, Non-Negotiable) Description Date
Regular earnings
23.03 138.18 4.29 7.20 5.45 25.74 43.20 32.70
State Social Security
Rate
Hours
54.00
Earnings
380.50
Year to
2,280.05
Medicare
Not eligible for leave accruals.
Current Year to date Earnings 380.50 2,280.05 Taxes 39.97 239.82 Deductions 0 0 Net Pay 340.53 2,040.23 Pay Period 03-19 04-02
Begin End
How much money did the employer withhold for taxes from this paycheck? $________ If you are planning a monthly budget, should you plan on using your gross pay or your net pay? Explain why and give an example.
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Assignments/understanding your paychecks and reading W-2’s
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Next is a sample Form W-2 for Lisa Michaels. Use this to answer the following questions.
a Control number
22222
OMB NO. 1545-0008 1 Wages, tips, other compensation 2 Federal income tax withheld
b Employer identification number (EIN)
08-X1X0X1X
c Employer’s name, address, and ZIP code
9175
3 Social Security Wages
701.42
4 Social security tax withheld
ABC Painting Co., Inc. 432 Lormard Avenue Greenville, MA 01234
eX Employee’s first name and initial Last name Suff.
9175
5 Medicare wages and tips
228.06
6 Medicare tax withheld
9175
7 Social Security Tips 9 Advance EIC payment
63.93
8 Allocated Tips 10 Dependent care benefits 12a 12b
Retirement Plan Third-Party sick pay
Lisa N. Michaels 33-Clark Lane Greenville, MA 01234
f Employee’s address and ZIP code
11 Nonqualified plans 13 Statutory
employee
12c 12d
20 Locality name
14 Other
15 State Employer’s state ID number
16 State Wages, tips, etc. 17 State Income Tax 18 Local wages, tips, etc. 19 Local Income tax
MA
Form
11-X1X0X1X
9175
402
9175
215
Greenville
W-2 Wage and Tax Statement
Copy A for Social Security Administration Dept. of the Treasury – Internal Revenue Services
Do Not Cut, Fold, Or Staple Forms on this Page – Do not Cut, Fold or Staple Forms on This Page In Lisa’s case, how much did she earn (wages, tips, other compensation)? $___________ How much was withheld (include all 5 taxes!) $____________. If you have not received your Form W-2 from your employer by the end of January, what should you do?
You must file a tax return if your income is above a certain level. The amount varies depending on filing status, age and the type of income you receive. Even if you do not have to file, you should file to get money back if Federal Income Tax was withheld from your pay, or you qualify for a refundable credit that may give you a refund even if you do not owe any tax.
Your tax return to the IRS must be mailed by April 15. You will need your Form W-2 to prepare your return. Remember, more than 70% of people who file are due a refund, so it may be to your advantage to file even if you are not required. 1. 2. 3. Using your current W-2 form what was your Gross Pay? $______________ What was your Net Pay? $_______________ How much was withheld in taxes? $_______________
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Assignments/understanding your paychecks and reading W-2’s
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4.
Following is a sample W-2 Form. Yours may look slightly different. A hard copy is included with this assignment. A link is also provided to use or insert in your browser, print “current page”, and complete for fax or delivery to instructor. You will not be able to complete on that page. Please complete this form from your actual Form W-2. Turn in the completed sample W-2 to your instructor. Do not use this form for filing with the IRS. To use: Use the control button and click on website http://www.irs.gov/pub/irs-pdf/fw2.pdf. Use page #3 of the publication.
(W-2 form on hard-copy of assignment)
Also, provide details of what you are have accomplished at work during the last month. Have you had any success with meeting the goals you set upon entering the Career Experience Program? Give at least one example of what is going well and what steps you took to achieve this; also, include an example of what is not going well. Provide a way in which you hope to improve on this. Do you need any help? Use an additional piece of paper to complete your answer.
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Assignments/understanding your paychecks and reading W-2’s
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