TEENS: How to Decode Your Paycheck

It’s a great feeling to get that first paycheck! It’s important to read your paycheck stub and look for any errors.

More employers are using direct deposit, sending your pay directly to your bank account. You then get an Earnings Statement that looks similar to the sample below. In the case of direct deposit, the bottom will not be an actual check but will show what was deposited into your account.

Take a minute to learn how your net pay is calculated.

Required deductions
These required deductions are taken out of your Gross Pay automatically. Here, John R. Doe is not earning enough to pay federal or state income tax. When your earnings exceed $7,600 in a year, you will begin to pay federal income tax.  All workers pay into Social Security and Medicare. Both programs are funded by FICA, a payroll tax. FICA stands for Federal Insurance Contributions Act (FICA) tax.

Other deductions are voluntary. These can include premiums for health insurance and your contributions to a retirement account.

Welcome to the world of work. As you turn 18, how you handle your money can have an impact on looking for a job. Learn how your credit history – your history of paying your bills – can make a difference! 

 

Source: http://www.themint.org/teens/decoding-your-paycheck.html

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