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Student handout

Reconcile a fictional paycheck

Reconcile a fictional pay statement and distinguish federal withholding from Social Security and Medicare deductions.

Class period, optional

Class date

Use only the fictional scenario

Do not enter or write personal income, debts, account balances, policy details, names, or identifying information. This activity does not need a name or FinanceLearn account.

Scenario

Jordan receives a fictional biweekly paycheck with $2,000 of gross pay. Federal withholding is 10 percent, state withholding is 3 percent, and annual pay remains below the Social Security wage base.

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Tasks and response space

  1. 1. Predict whether take-home pay will be above or below $1,600. Give one sentence of reasoning.

  2. 2. Enter $2,000 gross pay, 26 checks, 10 percent federal withholding, and 3 percent state withholding. Keep the wage-base input at its displayed default.

  3. 3. Record Social Security, Medicare, federal withholding, state withholding, and take-home pay.

  4. 4. Add the four deductions and reconcile them to gross pay minus take-home pay.

  5. 5. Explain why federal withholding and Social Security are separate lines even though both reduce this paycheck.

Extension

Change only the federal withholding rate to 12 percent and explain which lines move and which stay fixed.

All six activities: classroom lessons.

This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.