social security & medicare
DESCRIPTION
Social Security & medicare. Gross Pay vs Net Pay. Gross Pay → What your total pay is before deductions Net Pay → The amount your paycheck is for → Also known as your “take home pay” Net Pay = Gross Pay - Deductions. Deductions. For each paycheck, you can have several deductions: - PowerPoint PPT PresentationTRANSCRIPT
SOCIAL SECURITY & MEDICARE
Gross Pay vs Net Pay Gross Pay
→ What your total pay is before deductions
Net Pay→ The amount your paycheck is for→ Also known as your “take home pay”
Net Pay = Gross Pay - Deductions
Deductions For each paycheck, you can have several
deductions:1. Social Security2. Medicare3. Tax Withholdings4. Retirement Plans5. Union Dues6. Many More
Social Security Retirement benefits for people who are
at least 62 Disability benefits for workers who are
disabled or unable to work Survivors’ benefits, paid to spouses and
dependent children when a social security recipient dies
Originated in 1935 at 1% Current rate is 6.2%
Medicare Medical insurance for some disabled
people and people over 65
Originated in 1966 at 0.35% Current rate is 1.45%
Both Social Security and Medicare were established in the Federal Insurance Contribution Act FICA
Social Security & Medicare Social Security
Currently pay 6.2% of taxable income to S.S.
Maximum taxable income of $106,800 Increasing to $110,100 next year What is the most you could pay in Social
Security Tax in one year?
Social Security & Medicare Medicare
Currently pay 1.45% of taxable income to Medicare
No maximum What is the most you could pay in Medicare
in one year?
Example Ramiro got his first job in 2006. In that
year, Social Security tax was 6.2% of income up to $94,200. Medicare tax was 1.45%. If Ramiro earned $73,210 in 2006, how much did he pay in Social Security and Medicare?Social Security
= 73,210 • 0.062= 4,539.02
Medicare= 73,210 • 0.0145= 1,061.545
Total Withholdings= 4,539.02 + 1,061.55= 5,600.57
Example What are the social security and
Medicare withholdings for an executive whose annual gross earnings are $98,430 in 2007, when the maximum taxable income was $97,500?Social Security
= 98,430= 6,045
Medicare= 98,430 • 0.0145= 1,427.24
Total Withholdings= 6,045 + 1,427.24= $7,472.24
• 0.062= 97,500
Social Security & Medicare Social Security
Currently pay 6.2% of taxable income to S.S.
Maximum taxable income of $106,800 Increasing to $110,100 next year What is the most you could pay in Social
Security Tax in one year?
Social Security & Medicare Medicare
Currently pay 1.45% of taxable income to Medicare
No maximum What is the most you could pay in Medicare
in one year?
Example You currently earn an annual salary of
$247,500. You must pay a social security tax rate of 6.2% of taxable income up to $106,800.
a) What is your monthly salary?b) What month will you reach the
maximum taxable income?c) How much will you pay in social
security in February?
Example You currently earn an annual salary of
$247,500. You must pay a social security tax rate of 6.2% of taxable income up to $106,800.
a) What is your monthly salary?b) What month will you reach the
maximum taxable income?c) How much will you pay in social
security in Nov.?
Example You currently earn an annual salary of
$247,500. You must pay a social security tax rate of 6.2% of taxable income up to $106,800.
a) What is your monthly salary?b) What month will you reach the
maximum taxable income?c) How much will you pay in social
security in June?
Social Security & Medicare Page 319, 2-4
Social Security & Medicare Maximum you could pay into S. S. each
year:Year Social Security
Maximum Taxable Income
Maximum You Could Pay Into S.S.
1978 6.05% 17,7001980 6.13% 25,9001982 6.7% 32,4001984 6.7% 37,8001986 7.15% 42,0001988 7.51% 45,0001990 7.65% 51,300
$1,070.85$1,587.67$2,170.80$2,532.60$3,003.00$3,379.50$3,924.45
Social Security & Medicare3) In 1990, Jerry’s gross pay was $78,000.
a) What was his monthly gross pay?b) In what month did he his the
maximum?c) How much did he pay in S.S. tax in Jan?d) How much S.S. tax did he pay in Dec?
$0
August$497.25
$6,500
Social Security & Medicare In 1978, Dawn earned $48,000.
a) What was her monthly gross pay?b) In what month did she reach the
maximum Social Security income?c) How much S.S. tax did she pay in Feb?d) How much S.S. tax did she pay in May?e) How much S.S. did she pay in Nov.?
$4,000
May$242$102.85
$0
SOCIAL SECURITY & MEDICARE
Social Security & Medicare Yesterday, we covered Social Security &
Medicare Social Security
Currently at 6.2% Maximum taxable income of $106,800 Pay a maximum of $6,621.60
Medicare Currently at 1.45% No maximum taxable income
Social Security & Medicare How much would you have to currently
earn to pay as much in Medicare as you do in Social Security?
Social Security & Medicare Today, we are going to create piecewise
functions detailing Social Security & Medicare
Recall, a piecewise function looks like:0.15 x when 0 ≤ x < 5000.20 x when 500 ≤ x < 15000.22 x when 1500 ≤ x
C(x) =
Social Security & Medicare Creating a piecewise function:
1) Create an algebraic expression for S.S. (and Medicare if applicable) for income less than the maximum amount
2) Determine total amount possible to be paid into S.S. when maximum amount is hit
Social Security & Medicare Express the 2006 as a piecewise
function:2006: S.S. rate of 6.2% w/ max at
$94,200 Medicare rate of 1.45% w/ no
max
Social Security & Medicare Express the 1999 as a piecewise
function: 1999: S.S. rate of 6.2% w/ max at $72,600
Med. rate of 1.45% w/ max no max
Social Security & Medicare Express the 2009 as a piecewise
function: 2009: S.S. rate of 6.2% w/ max at $106,800
Med. rate of 1.45% w/ no max
SOCIAL SECURITY & MEDICARE
Social Security & Medicare Stephanie was just hired at a new job making
$135,000 a year. How much will she pay in FICA taxes in her first year?
Social Security & Medicare Stephanie was just hired at a new job making
$135,000 a year. How much will she pay in FICA taxes in her first year?
In what month will she surpass the taxable income amount of $106,800 and how much will she pay in that month?
Social Security & Medicare In 2007, the Social Security tax rate was 6.2% with
a maximum taxable income of $97,500 and the Medicare tax rate was 1.45%. Express this as a piecewise function.
Social Security & Medicare On Friday, we started working on the 6.5
worksheet. Finish this worksheet now.
Social Security & Medicare1. Dr. Gumman got his first job in 1990. In that year, the government took out 7.45% of each income for Social Security and Medicare, until a person made $51,300. If Dr. Gumman earned $31,340 in 1990, how much did he pay to Social Security and Medicare?
Social Security & Medicare2. Lauren earned a total of “d” dollars last year. The government took out 6.2% for Social Security and 1.45% for Medicare. Write an algebraic expression that represents what she paid to Social Security and Medicare combined.
Social Security & Medicare3. In 1978, the Social Security and Medicare tax rate combined was 6.05% up to $17,700 earned.
a) Express the Social Security tax as a piecewise function.
b) Ten years later, the percent had increased to 7.51% and the maximum taxable income had increased to $45,000. Express this as a piecewise function.
c) If a person earned $50,000 in 1978 and $50,000 in 1988, what was the difference in taxes paid?
Social Security & Medicare4. In 2010, the government took out 6.2% of earnings for Social Security to a maximum taxable income of $106,800. For Medicare, 1.45% of earnings was paid. How much money would someone have to have earned in 2010 so that their payments to Medicare were equal to their payments into Social Security?
Social Security & Medicare5. In 1998, Lisa earned $149,461.20. The Social Security maximum taxable income was $68,400, and the Social Security percent was 6.2%.
a. What was her monthly gross pay?b. In what month did she hit the maximum?c. How much S.S. tax did she pay in May?d. How much S.S. tax did she pay in July?e. How much S.S. tax did she pay in June?
Social Security & Medicare6. In 2010, for the first time since 2004 the maximum taxable income was not raised. Find the maximum a person could pay into Social Security in 2010.
Rate of 6.2% w/ max income of $106,800.
Social Security & Medicare7. Let t(x) represent the total combined Social Security and Medicare taxes for the year 2007. If x represents the income, express this total as a piecewise function.
2007: S.S. = 6.2% max @ $97,500
Social Security & Medicare8. Mr. Jackson had 2 jobs in 2005. The first job, in which he earned $74,007, was from January to August, and the second job, in which he earned $35,311, was from August to the end of the year. At the first job, he earned $74,007. As a result, he paid too much Social Security tax. How much should be refunded?
Social Security & Medicare9. In 2009, Dr. Kirmser’s gross pay was $381,318.60.
S.S. = 6.2% max @ $106,800
a. What was her monthly gross pay?b. In what month did she hit the maximum?c. How much S.S. tax did she pay in Feb.?d. How much S.S. tax did she pay in Sept.?e. How much S.S. tax did she pay in April?
SOCIAL SECURITY & MEDICARE
Social Security & Medicare So far, we have:
Calculated total FICA taxes Determined when you over surpass the
maximum taxable income Created piecewise functions for FICA taxes
Today: Graph these FICA taxes
Social Security & Medicare In 2006, the social security tax rate was
6.2% of income up to $94,200. Graph this function:
1) What units would make sense to label the x-axis (income)?
2) What units would make sense to label the y-axis (Social Security tax)?
Social Security & Medicare
Social Security & Medicare In 1991, the Social Security tax rate was
6.2% on income up to $53,400. Create a piecewise function for this and graph the function.
Social Security & Medicare10. If x represents income, express the Social Security function s(x) for 2005 as a piecewise function.
Social Security = 6.2%Maximum taxable income of $90,000
Social Security & Medicareb. Graph the Social Security function for 2005.
Social Security & Medicarec. Find the coordinates of the cusp.
Social Security & Medicared. If x represents income, what is the Medicare function m(x) for 2005?
Social Security & Medicared. Graph the Medicare function for 2005 on the same axes as the Social Security function in part b.
Social Security & Medicaree. Elena worked three jobs in 2005. The total of her three incomes was less than $90,000. At Hamburger Coach, she made h dollars. At the Binghamton Book Exchange, she made b dollars. At Ruby’s Restaurant, she made r dollars. Express the combined total of her social security and Medicare taxes as an algebraic expression.
Social Security & Medicaref. In 2005, how much money would someone have to have earned so that their payments into Medicare were equal to their payments into Social Security? Round to the nearest dollar.
Social Security & Medicare In your notebook, please complete
numbers 5-10 on page 319
Social Security & Medicare What would it mean if the slope of the
graph was equal to 1?
Is this possible?
Social Security & Medicare Some politicians have suggested
removing the maximum taxable income and apply Social Security to all income. Why would this be unfair to very wealthy people?
Should this idea be implemented?
Social Security & Medicare Some politicians have suggested
removing the maximum taxable income and apply Social Security to all income. Why would this be unfair to very wealthy people?
Should this idea be implemented?
Social Security & Medicare A politician is listening to a new Social
Security tax plan. The graph is shown below. The two parts of the graph are disconnected where x = 100,000. Why would this be an unfair Social Security tax function?
$6,000$8,000
Social Security & Medicare5) In 1991, Social Security and Medicare taxes were itemized separately on paycheck stubs and tax forms.
a) Find the maximum a person could contribute to Social Security and Medicare:
b) If f(x) represents the Social Security tax, express this as a piecewise function.
Social Security & Medicare6) Express the 1993 Social Security tax function as a piecewise function t(x), where x is the annual income. Graph the function. What are the coordinates of the cusp?
Social Security & Medicare7) Graph the Social Security tax function for 1992. What are the coordinates of the cusp? On the same axis, graph he Medicare function.
Social Security & Medicare8) In 2007, Jessica earned p dollars, where p >100,000. Express the amount her employer contributed to her Social Security tax in February algebraically.
Social Security & Medicare9) In 1995, Eve earned d dollars, where d < 50,000. Express the amount she paid to Social Security and Medicare as a function of d.
Social Security & Medicare10) Keesha earned x dollars per month in 2006, where x < $5,600.
a) Did she earn more or less than the maximum taxable income?
b) Express her Social Security tax algebraically.
c) Express her Medicare algebraically.
Social Security & Medicare15) In a year when the maximum income for Social Security was $106,800, Bart worked at two jobs. In one job he earned $99,112. In his second job, he earned $56,222. Both of his employers took out Social Security tax. As a result, Bard had paid excess Social Security tax, and the government must return some of it to him. How much does the government owe him?
Social Security & Medicare16) An All-Star baseball player earning $25,000,000 per year plays 162 games per year. If you divide the salary by the number of games, does that baseball player reach this year’s maximum taxable income in the first game of the year?
SOCIAL SECURITY & MEDICARE
Social Security & MedicareWhat we have covered in this section:a) FICA Taxes in general
a) When you earn less than the maximumb) When you earn more than the maximum
b) Piecewise Functionsa) Creating a functionb) Using a function to answer a question
Social Security & MedicareWhat we have covered in this section:
c) Earning more than the maxc) Finding monthly payd) Finding the month you will surpass the
maximume) Calculating S.S. prior to that monthf) Calculating S.S. after that monthg) Calculating S.S. for that month
Social Security & MedicareWhat we have covered in this section:
d) Graphing Social Security functionsd) Labeling the axise) Finding two pointsf) Calculating the cuspg) What happens after the cusp
Social Security & MedicareWhat we have covered in this section:
e) How much would you have to earn so that you pay the same amount into Medicare that you pay into Social Security
f) Questions that we reviewed together about graphs
Social Security & MedicareWhat we have covered in this section:
g) Social Security refundh) Algebraic expressions