This week's lesson is
Deductions!
a supplemental activity from
It's for Real-Workplace Ethics Series I, Issue 4
The Paycheck
The amount of money an employee will receive in his/her paycheck is called net pay. To obtain net pay, the company will take the gross pay and subtract all the deductions. Typical deductions are itemized below.
FIT or federal income taxes. The amount deducted ranges from 0 to 39%, depending on income, dependents and many other factors.
FICA or social security taxes. The deduction is 6.2% of the first $76,200 in earnings for year 2000.
FICM or social security medical component. The deduction is 1.45% of gross pay.
State income taxes. The amount deducted depends on individual states.
Aaron has worked 20 hours this week. He earned $175.88 for his work. He is hoping to buy a PDA for himself with this paycheck that cost $115.99. Calculate Aaron's net pay to find if he earned enough to buy the PDA:
FIT 15.00% $__________
FICA 6.20% $__________
FICM 1.45% $__________
State 3.50% $__________
Total deductions $__________
What net pay will the Aaron receive? $__________
Is Aaron able to purchase the PDA he wants? YES NO
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TEACHER'S GUIDE
FIT 15.00% $26.38
FICA 6.20% $10.90
FICM 1.45% $2.55
State 3.50% $6.16
Total deductions $45.99
What net pay will the Aaron receive? $129.89
Is Aaron able to purchase the PDA he wants? YES
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