Financial Literacy: Reading a Pay Stub and Taxes
Understanding earnings, deductions, net pay, and basic taxes
Financial Literacy: Reading a Pay Stub and Taxes
Understanding earnings, deductions, net pay, and basic taxes
Financial Literacy - Grade 6-8
- 1
Maya worked 12 hours at a rate of $15 per hour. What is her gross pay before any taxes or deductions?
Gross pay is the total amount earned before money is taken out.
Maya's gross pay is $180 because 12 hours multiplied by $15 per hour equals $180. - 2
A pay stub shows gross pay of $420. The deductions are $38 for federal income tax, $18 for state income tax, $26.04 for Social Security, and $6.09 for Medicare. What is the total amount of deductions?
The total deductions are $88.13 because $38 + $18 + $26.04 + $6.09 = $88.13. - 3
Using the same pay stub from problem 2, what is the net pay?
Net pay is the amount left after all deductions are subtracted from gross pay.
The net pay is $331.87 because $420.00 - $88.13 = $331.87. - 4
Carlos earns $14 per hour. He worked 20 regular hours and 3 overtime hours. Overtime is paid at 1.5 times the regular hourly rate. What is Carlos's total gross pay?
First find the overtime hourly rate by multiplying the regular rate by 1.5.
Carlos's total gross pay is $343. Regular pay is 20 x $14 = $280. Overtime pay is 3 x $21 = $63. The total is $280 + $63 = $343. - 5
A pay stub lists year-to-date earnings of $3,250. What does year-to-date mean on a pay stub?
Year-to-date means the total amount earned or deducted from the beginning of the calendar year up to the current pay period. - 6
A student sees these deductions on a pay stub: federal income tax, Social Security, and Medicare. Which of these deductions helps pay for retirement and disability benefits for workers?
Think about the government program that supports people after they retire or if they become disabled.
Social Security helps pay for retirement and disability benefits for workers. - 7
A pay stub shows gross pay of $500 and net pay of $402.50. How much money was taken out for deductions?
The deductions were $97.50 because $500.00 - $402.50 = $97.50. - 8
Look at this pay information: Gross pay is $600. Federal income tax is $54. State income tax is $24. Social Security is $37.20. Medicare is $8.70. Health insurance is $30. What is the net pay?
Add all deductions first, then subtract that total from gross pay.
The net pay is $446.10. The total deductions are $54 + $24 + $37.20 + $8.70 + $30 = $153.90, and $600 - $153.90 = $446.10. - 9
Jada's pay stub says she earned $750 this pay period. Social Security is 6.2% of gross pay. How much is taken out for Social Security?
Change 6.2% to the decimal 0.062 before multiplying.
The Social Security deduction is $46.50 because 6.2% of $750 is 0.062 x $750 = $46.50. - 10
Liam's pay stub says he earned $750 this pay period. Medicare is 1.45% of gross pay. How much is taken out for Medicare? Round to the nearest cent.
The Medicare deduction is $10.88 because 1.45% of $750 is 0.0145 x $750 = $10.875, which rounds to $10.88. - 11
A pay stub has a line labeled employee contribution to retirement: $25. Is this amount part of gross pay, a deduction, or net pay?
Look for whether the money is earned, taken out, or received.
The $25 employee contribution to retirement is a deduction because it is money taken out of the paycheck before the employee receives net pay. - 12
A weekly pay stub shows net pay of $286. If the worker receives the same net pay every week for 4 weeks, how much net pay will the worker receive in 4 weeks?
The worker will receive $1,144 in net pay over 4 weeks because $286 x 4 = $1,144. - 13
Compare the two pay stubs. Pay Stub A has gross pay of $400 and deductions of $70. Pay Stub B has gross pay of $400 and deductions of $95. Which pay stub has the higher net pay, and by how much?
Find each net pay first, then compare the two amounts.
Pay Stub A has the higher net pay by $25. Pay Stub A's net pay is $400 - $70 = $330, and Pay Stub B's net pay is $400 - $95 = $305. - 14
A worker's gross pay is $480. The total deductions are $96. What percent of the gross pay was taken out for deductions?
Use deduction amount divided by gross pay, then convert the decimal to a percent.
The deductions were 20% of gross pay because $96 divided by $480 equals 0.20, and 0.20 is 20%. - 15
Explain why net pay is often called take-home pay.
Net pay is often called take-home pay because it is the amount of money the worker actually receives after taxes and other deductions are taken out.