We continued our Project-Based learning activity on Personal Financial Literacy today.
Last night for homework, I asked the students to choose a career they are interested in pursuing. I explained that the difference between a career and a job is the training, usually through college, you receive. Once everyone had shared their choice, we looked up the average salary for that career in Texas. I explained that some jobs pay more in other states, so we want the salary for Texas. I also explained to my boys who wanted to be pro ballplayers and golfers that they would not begin as a Napoli or Spieth. I asked them to find the average salary of the average pro (if there is such a thing).
Once we had our salaries, I explained that this was their Gross income. That this amount (split over the year) is what they would receive BEFORE taxes were taken out.
I began by explaining about payroll taxes. I explained that they are taken from your check monthly by the federal government (IRS). I began with income tax and explained that this money is used by the government to pay for government jobs, buildings, memorials, etc. Them we moved on to Social Security and Medicare. I explained that these taxes were taken from our paycheck each month and held for our use once we retired. I also explained that employers also match these funds, helping them to grow more quickly.
I then revisited income tax. I pointed out that income tax is taken from paychecks monthly, but that if the government determines that enough income tax was taken out of your paychecks, you may have to pay an additional amount on April 15. We also discussed some deductions that are available to help keep the owed income tax down or result in a refund.
At this point, we ran out of time. So, we will continue with Gross vs Net income tomorrow.