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Financial Literacy Club

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Money After High School · Lesson 1

Understanding Your Paycheck

Part A. Vocabulary

Define each term in your own words.

W-4

Part B. Guided notes

Fill in each blank using the word bank.

Word bank: Check · Security · semimonthly · take-home · withholding

  1. Gross = earned. Net = .
  2. FICA = Social 6.2% + Medicare 1.45%.
  3. The W-4 sets your federal .
  4. Biweekly = 26 paychecks; = 24.
  5. your pay stub.

Part C. Check your understanding

Circle the best answer.

  1. You receive your first paycheck and notice the amount deposited is lower than your gross pay.

    1. Why?

    • A. The bank charged a deposit fee.
    • B. Taxes like Social Security, Medicare, and income tax withholding were taken out first.
    • C. Your employer made a mistake.
    • D. First paychecks are always half.

  2. You're paid biweekly.

    2. How many paychecks will you get in a year?

    • A. 12
    • B. 24
    • C. 26
    • D. 52

  3. 3. The W-4 form tells your employer how much federal income tax to withhold from your pay.

    True/False

Part D. Apply it

Show your work.

  1. 1. Your gross pay is $800. How much is withheld for Social Security and for Medicare?

  2. 2. You're paid $1,000 gross every two weeks (biweekly). What's your gross pay for the year?

Part E. Think about it

Answer in complete sentences.

  1. 1. What would you do if your paycheck showed fewer hours than you worked?

  2. 2. Why do you think taxes are taken out of each paycheck instead of paid once a year?

Exit ticket

Name

What's the difference between gross pay and net pay?