Reading a Paystub

What is the term used for the total amount of money earned before any deductions?

• Net pay

• Gross pay

• Salary

• Wages

Which type of tax is specifically used to fund government programs like Social Security and Medicare?

• Local tax

• State tax

• Federal Insurance Contributions Act tax (FICA)

• Income tax

Retirement contributions are deducted from your paycheck "pre-tax"; what effect does that have on your "taxable income"?

• No effect, so you pay the same amount in tax

• increases your taxable income, which means you pay more tax

• decreases your taxable income, which means you pay less tax

What is a 401k an example of?

• Healthcare contribution

• Retirement savings plan

• Insurance plan

• Tax deduction

Why is it important to understand both gross and net pay?

• All of the above

• To decide on job offers

• To calculate work hours

• To plan personal spending