Reading A Pay Stub


Reading a Pay Stub
1 Review these terms with your students:
Activity: Individual
• Pay period: Set length of time (typically weekly, bi-weekly, or monthly) over
3 0 M I N U T E S
which employee time is recorded and paid
Materials: Activity handout
• Gross pay: The amount people earn per pay period before any deductions or
Objective: The purpose of
this activity is for students
taxes are taken out.
to interpret the information
found on a pay stub. Stu-
• Net pay: Gross pay minus deductions and taxes
dents will also investigate
what employers do with
• Payroll deduction: The amounts subtracted from gross pay, which results in
money deducted from
your net pay
employee paychecks.
• Pension: A sum of money paid regularly as a retirement benefit
Analysis Standard: Under-
stands tools, strategies
• 401(k): A retirement savings plan to which contributions are made by the
and systems used to
employee and employer and are invested; it is tax-deferred
maintain, monitor, control
and plan the use of
• FICA (Federal Insurance Contributions Act): A payroll tax used to fund
financial resources.
Social Security and Medicare
2 Have students reference the information found on the sample pay stub and have
them answer the following questions:
a What is the employee’s gross pay? $1,200.00
b How much local tax is deducted from the paycheck? $23.13
c How much state tax is deducted from the paycheck? $40.06
d How much federal tax is deducted from the paycheck? $157.39
e How much did the employee contribute to FICA? $71.69
f How much did the employee contribute to Medicare? $16.77
g How much did the employee pay for the other deductions? $91.75 (total
h What was the purpose of the other deductions? Health insurance and 401(k)
i What is the employee’s net pay? $809.21
j What percent of the employee’s paycheck is deducted for taxes and other
expenses? 33%
Foundations in Personal Finance High School Edition


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