Page on why creating a budget is so important
Name: __________________ Period: ____
NET INCOME
Directions: Assume you are a Sales Associate at your local retail store. You earn $11.50 per hour. You work full time (40 hrs per week) Calculate your earnings for your annual, monthly and weekly pay below….
Federal Income Tax (FIT) * Obtain a copy of the FIT table from your teacher
According to the federal income tax table (attached) as a single Sales Associate claiming one allowance, earning $________ weekly, I will pay _$____ per week for federal income taxes. If I multiply this amount by 4 weeks, I will pay approximately $_____ per month for Federal Income Taxes.
State Tax and Taxable Wages
Personal Exemptions: Single $1500 Married $3000 Dependents $700
Formula 1: Find your Taxable Wages
Annual Gross Pay – Personal Exemptions = Taxable Wages
$_________ - $_________ = $__________
-- 1% on the first $6,622 of taxable income
-- 2% on taxable income between $6,623 and $15,698
-- 4% on taxable income between $15,699 and $24,776
-- 6% on taxable income between $24,777 and $34,394
-- 8% on taxable income between $34,395 and $43,467
-- 9.3% on taxable income of $43,468 and above.-- 1% on the first $6,622 of taxable income
-- 2% on taxable income between $6,623 and $15,698
-- 4% on taxable income between $15,699 and $24,776
-- 6% on taxable income between $24,777 and $34,394
-- 8% on taxable income between $34,395 and $43,467
-- 9.3% on taxable income of $43,468 and above.-- 1% on the first $6,622 of taxable income
-- 2% on taxable income between $6,623 and $15,698
-- 4% on taxable income between $15,699 and $24,776
-- 6% on taxable income between $24,777 and $34,394
-- 8% on taxable income between $34,395 and $43,467
-- 9.3% on taxable income of $43,468 and above.
Formula 2:Find your Annual Tax Withheld(*Assuming a state income tax of 3%)
Taxable Wages X Tax Rate = Annual Tax Withheld
$______ X _____ = $_________
Formula 3: Find your tax withheld per month
Annual Tax Withheld / Number of Pay Periods per Year = Tax Withheld per month
$_______ / 12 months = _______
Social Security Tax *Assume you pay into social security.
Formula: Determine how much you pay into Social Security.
*Social Security rate is 6.2 percent
Monthly Gross Pay X Tax Rate = Monthly Social Security Withheld
$_________ X _______ = $___________
Medicare Tax *Medicare tax rate is 1.45 percent of all your annual income.
Formula:
Monthly Gross Pay X Tax Rate = Monthly Medicare withheld
$_______ X ______ = $___________
Medical Insurance
Many businesses offer group insurance plans to their employees. Because there are so many different plans, assume a single plan health insurance costing $3685 annually. Employer covers 80 percent of the cost…
Formula 1: If your employer pays 80%, calculate your percent
100% - Employers Contribution % = Employee Contribution%
____% - _______% = ______%
Formula 2: Calculate your Annual Employees share
Annual health cost X Employees Contribution = Annual Employees Share
$_____ X _____% = ________
Formula 3: Find the deductions for benefits per month
Annual Employees Share / Number of Pay periods per year = Deduction per pay Period
$______ / 12 months = $______ monthly
Net Pay
Formula 1: Calculate your total deductions using finding from above
Federal State Social Medical Total
Income Tax + Tax + Security + Medicare + Insurance =Deductions
$_______ + $___ + $_____ + $______ + $ _____ = $_______
Formula 2: Calculate Net Pay
Monthly Gross Pay – Total Deductions = Net Pay
$____________ - $__________ =$ ______
-----------------------
My gross income is $________ annually (per year), $______ monthly or $______ weekly
$________ per month for Federal Income taxes
$________ per month for State Tax
$________ per month for Social Security
$________ per month for Medicare
$________ per month for medical insurance.
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