What is the difference between gross pay and net pay?
Gross pay is earnings before deductions; net pay is the amount actually received after deductions.
A worker earns $640 gross pay and has $125 in deductions. What is net pay?
$515.
What is the main purpose of Form W-4?
It tells the employer how much federal income tax to withhold.
Under the 50/30/20 rule, what percentage goes to needs? Wants? Savings?
50%, 30%, 20%.
A paycheck is entered into which column: deposit or withdrawal?
Deposit.
What is a deduction? Give one example.
Money taken out of gross pay; examples include federal income tax, Social Security, Medicare, health insurance, or retirement contributions.
Which two payroll taxes together are commonly called FICA?
Social Security and Medicare.
Taylor is 21, unmarried, has no dependents, and has one job. Which filing status should Taylor select?
Single.
Weekly net pay is $600. Find the three budget amounts.
Needs $300; Wants $180; Savings $120.
Beginning balance = $425. You buy groceries for $72. What is the new balance?
$353.
Explain the difference between a need and a want.
A need is required for basic living/work; a want is optional and improves enjoyment or convenience.
A worker earns $900. Social Security is 6.2%. How much is withheld for Social Security?
$55.80
Chris is married filing jointly. Chris’s spouse also works. What should Chris consider in Step 2?
Indicate that there are multiple jobs/spouse works.
A student has $300 available for needs. Gas costs $45, groceries cost $85, and hygiene/work supplies cost $30. How much remains in the Needs category?
$140.
Beginning balance = $500. Record:
What is the ending balance?
$490.
Define withholding and explain how it relates to a W-4.
Withholding is money an employer takes from a paycheck for taxes; the W-4 helps determine federal income-tax withholding.
Gross pay is $1,200. Federal tax = $84, state tax = $36, Social Security = $74.40, Medicare = $17.40, health deduction = $45. Find total deductions and net pay.
Total deductions = $256.80; net pay = $943.20.
Morgan has two qualifying children under age 17. Using the figures from your class W-4 lesson, what amount would be entered for the children in Step 3?
$4,000.
A student drives 12 miles one way to work, works 5 days, gets 30 MPG, and gas costs $3.00 per gallon. Estimate weekly gas cost.
$12
Find the error:
Starting Balance $600
Withdrawal -$50 for gas, new balance $550
Paycheck +$200, new balance $350
Withdrawal -$75 for food, new balance $275
After the paycheck deposit, balance should be $750, then $675 after food.
Use all three words correctly in one explanation: deposit, withdrawal, running balance.
A deposit adds money to the account, a withdrawal removes money, and the running balance shows the account amount after each transaction.
A pay stub shows gross pay of $1,000 and Social Security withholding of $40. Is the Social Security amount correct using the 6.2% rate? If not, what should it be?
No. It should be $62.
Meet Alex Rivera. Alex is married filing jointly. Alex earns $48,000. Alex’s spouse works full-time. They have one child under 17 and no other dependents. Alex has no other income and does not want extra withholding.
Students must identify what belongs in:
Step 1 — personal information; Married Filing Jointly
Step 2 — indicate spouse also works
Step 3 — $2,000 for one qualifying child
Step 4 — blank
Step 5 — sign and date
A student earns $500 net weekly and plans:
Does this follow 50/30/20? If not, redesign it exactly according to the rule.
No. Correct amounts: Needs $250, Wants $150, Savings $100.
Beginning balance is $500. A $180 car battery setback occurs, followed by a $125 work bonus. What is the ending balance, and how should each transaction be entered?
$445. Car battery = $180 withdrawal; bonus = $125 deposit.