Reading A Pay Stub (Page 3 of 5) in pdf

Reading A Pay Stub Page 3

N A ME:

DAT E:

Reading a Pay Stub

(1/3)

Directions

1 Review these terms before completing this activity:

• Pay period: Set length of time (typically weekly, bi-weekly, or monthly) over which employee time is

recorded and paid

• Gross pay: The amount people earn per pay period before any deductions or taxes are taken out

• Net pay: Gross pay minus deductions and taxes

• Payroll deduction: The amounts subtracted from gross pay, which result in your net pay

• Pension: A sum of money paid regularly as a retirement benefit

• 401(k): A retirement savings plan to which contributions are made by the employee and employer and

are invested; it is tax-deferred

• FICA (Federal Insurance Contributions Act): A payroll tax used to fund Social Security and Medicare

2 Reference the information found on the sample pay stub and answer the following questions:

a What is the employee’s gross pay?

b How much local tax is deducted from the paycheck?

c How much state tax is deducted from the paycheck?

d How much federal tax is deducted from the paycheck?

e How much did the employee contribute to FICA?

f How much did the employee contribute to Medicare?

g How much did the employee pay for the other deductions?

h What was the purpose of the other deductions?

CH A P TER 11

Foundations in Personal Finance High School Edition

Reading A Pay Stub Page 3