Sample 1: Dan just started working full-time and he is included on his parents’ health insurance plan. He withholds the maximum amount he can, so he won’t have to pay any additional taxes at the end of the year. Review Dan’s paystub below and determine where he may be spending money unnecessarily and how he could use those funds to maximize his savings.
123 Company Period Ending: 3/15/13
555 Anywhere Rd Pay Date 3/31/13
Anywhere, USA 11111
Dan J Jones Taxable Marital Status: Single
Social Security: XXX-XX-2222 Exemptions/Allowances:
Taxable Gross: $1,650.00 -Federal: 0 -State: 0
Net Pay: $1,245.00
Description Rate Hours This Period Year to Date
Regular $25.00 80 $2,000.00 $12,000.00
Overtime $30.00 0 $0.00 $0.00
Total $2,000.00 $12,000.00
Deductions This Period Year to Date
Federal Income Tax $200.00 $1,200.00
State Income Tax $30.00 $1800.00
Medicare Tax $25.00 $150.00
Social Security Tax $100.00 $600.00
Other
Health Insurance* $200.00 $1,200.00
Medical Flexible Spending Account* $50.00 $300.00
401(k)* $100.00 $600.00
Savings Deposit $50.00 $300.00
Total $755.00 $4,530.00
*Excluded from federal taxable wages
How can Dan maximize his savings?
Dan can maximize his savings by beginning to work overtime.
Sample 2: Rachelle just accepted a new job as an office assistant and will have her paychecks directly deposited with a portion going toward a 401(k). She also anticipates putting in a lot of overtime—and receiving overtime pay—as she learns her new job. Review Rachelle’s paystub below to determine what she could do to build her 401(k) and increase what she is contributing to savings.
123 Company Period Ending: 1/15/13
555 Anywhere Rd Pay Date: 1/31/13
Anywhere, USA 11111
Rachelle L Thomas Taxable Marital Status: Single
Social Security: XXX-XX-3333 Exemptions/Allowances:
Taxable Gross: $558.00 • Federal: 0 • State: 0
Net Pay: $443.00
Description Rate Hours This Period Year to Date
Regular $10.00 40 $400.00 $800.00
Overtime $15.00 12 $180.00 $360.00
Total $580.00 $1,160.00
Deductions This Period Year to Date
Federal Income Tax $36.00 $72.00
State Income Tax $9.00 $18.00
Medicare Tax $4.00 $8.00
Social Security Tax $16.00 $32.00
Other
Health Insurance* $22.00 $44.00
401(k)* $0.00 $0.00
Savings Deposit $50.00 $100.00
Total $137.00 $274.00
*Excluded from federal taxable wages
How could Rachelle build her retirement and increase her savings?
Rachelle could build her retirement and increase her savings by adding a certain percentage of her paycheck into it and resist withdrawing from the account.
Sample 3: Taylor works part-time for a construction company. His employer doesn’t offer health insurance, retirement savings or flexible spending accounts but his parents help him with medical expenses. He would like to save as much money as he can so he can buy a new truck. Review Taylor’s paystub below and determine how he could maximize his savings.
123 Company Period Ending: 2/15/13
555 Anywhere Rd Pay Date: 2/28/13
Anywhere, USA 11111
Taylor K Davis Taxable Marital Status: Single
Social Security: XXX-XX-4444 Exemptions/Allowances:
• Federal: 0 • State: 0
Description Rate Hours This Period Year to Date
Regular $12.50 40 $500.00 $2,000.00
Overtime $18.50 6 $111.00 $444.00
Total $611.00 $2,444.00
Deductions This Period Year to Date
Federal Income Tax $55.00 $220.00
State Income Tax $11.00 $44.00
Medicare Tax $8.00 $24.00
Social Security Tax $27.00 $108.00
Other
Savings Deposit $20.00 $80.00
Total $121.00 $484.00
*Excluded from federal taxable wages
Taxable Gross Pay: $611.00 / Net Pay: $490.00
What could Taylor do to maximize his savings?
To maximize his savings, Taylor could work more overtime hours.
123 Company Period Ending: 3/15/13
555 Anywhere Rd Pay Date 3/31/13
Anywhere, USA 11111
Dan J Jones Taxable Marital Status: Single
Social Security: XXX-XX-2222 Exemptions/Allowances:
Taxable Gross: $1,650.00 -Federal: 0 -State: 0
Net Pay: $1,245.00
Description Rate Hours This Period Year to Date
Regular $25.00 80 $2,000.00 $12,000.00
Overtime $30.00 0 $0.00 $0.00
Total $2,000.00 $12,000.00
Deductions This Period Year to Date
Federal Income Tax $200.00 $1,200.00
State Income Tax $30.00 $1800.00
Medicare Tax $25.00 $150.00
Social Security Tax $100.00 $600.00
Other
Health Insurance* $200.00 $1,200.00
Medical Flexible Spending Account* $50.00 $300.00
401(k)* $100.00 $600.00
Savings Deposit $50.00 $300.00
Total $755.00 $4,530.00
*Excluded from federal taxable wages
How can Dan maximize his savings?
Dan can maximize his savings by beginning to work overtime.
Sample 2: Rachelle just accepted a new job as an office assistant and will have her paychecks directly deposited with a portion going toward a 401(k). She also anticipates putting in a lot of overtime—and receiving overtime pay—as she learns her new job. Review Rachelle’s paystub below to determine what she could do to build her 401(k) and increase what she is contributing to savings.
123 Company Period Ending: 1/15/13
555 Anywhere Rd Pay Date: 1/31/13
Anywhere, USA 11111
Rachelle L Thomas Taxable Marital Status: Single
Social Security: XXX-XX-3333 Exemptions/Allowances:
Taxable Gross: $558.00 • Federal: 0 • State: 0
Net Pay: $443.00
Description Rate Hours This Period Year to Date
Regular $10.00 40 $400.00 $800.00
Overtime $15.00 12 $180.00 $360.00
Total $580.00 $1,160.00
Deductions This Period Year to Date
Federal Income Tax $36.00 $72.00
State Income Tax $9.00 $18.00
Medicare Tax $4.00 $8.00
Social Security Tax $16.00 $32.00
Other
Health Insurance* $22.00 $44.00
401(k)* $0.00 $0.00
Savings Deposit $50.00 $100.00
Total $137.00 $274.00
*Excluded from federal taxable wages
How could Rachelle build her retirement and increase her savings?
Rachelle could build her retirement and increase her savings by adding a certain percentage of her paycheck into it and resist withdrawing from the account.
Sample 3: Taylor works part-time for a construction company. His employer doesn’t offer health insurance, retirement savings or flexible spending accounts but his parents help him with medical expenses. He would like to save as much money as he can so he can buy a new truck. Review Taylor’s paystub below and determine how he could maximize his savings.
123 Company Period Ending: 2/15/13
555 Anywhere Rd Pay Date: 2/28/13
Anywhere, USA 11111
Taylor K Davis Taxable Marital Status: Single
Social Security: XXX-XX-4444 Exemptions/Allowances:
• Federal: 0 • State: 0
Description Rate Hours This Period Year to Date
Regular $12.50 40 $500.00 $2,000.00
Overtime $18.50 6 $111.00 $444.00
Total $611.00 $2,444.00
Deductions This Period Year to Date
Federal Income Tax $55.00 $220.00
State Income Tax $11.00 $44.00
Medicare Tax $8.00 $24.00
Social Security Tax $27.00 $108.00
Other
Savings Deposit $20.00 $80.00
Total $121.00 $484.00
*Excluded from federal taxable wages
Taxable Gross Pay: $611.00 / Net Pay: $490.00
What could Taylor do to maximize his savings?
To maximize his savings, Taylor could work more overtime hours.