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C H A P T E R 5
HONEY,THEY SHRUNK MY PAYCHECK
PRODUCT PREVIEW
Learning Goals By the end of this chapter you will be able to: • List standard paycheck deductions • Explain the purpose of withholding • Identify four taxes that are commonly withheld from a paycheck • Explain the purposes of the W-4, W-2, 1040, and 1099 • Interpret data on a paycheck stub. • Complete IRS 1040EZ • (Opt.) Argue for or against the flat tax or progressive tax
It's exciting when an employee receives their very first paycheck. After many years of school and career training, they are finally making some money! However, their excitement often turns to shock at what they see — or don’t see! The dollar amount on the paycheck isn’t anywhere near what they anticipated getting when they took the job. If salary is paid in 26 even paychecks, as you learned in the last chapter, why is the amount on the paycheck substantially less than 1/26th of the employee’s salary? What happened? Where did the money go? What happened to all what cash the employee was counting on? By the time a paycheck reaches the employee, many bites have been taken out of it to pay for a variety of things. These are called deductions . In this chapter we’ll explore standard paycheck deductions.
Chapter Resources: Bankrate.com has numerous easy-to-use financial calculators: mortgage, investment, home equity, credit card, auto, retirement, savings and college costs. Take time to explore the variety of calculators available to help you make informed financial decisions.
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