PFL: Employment and Income

Question 1

Explain the difference between a career and a job

Answer 1

career is a pathway of advancements, made of jobs a job is work done for pay

Question 2

Give an example of how education and training can affect lifetime income

Answer 2

income rises as education, training, experience, etc. rise higher paying jobs often require post-secondary education and applicable job experience

Question 3

Compare the costs of post-secondary education with the potential increase in income from a career of choice

Answer 3

cost of Harvard: $60,659 6 years after graduating, Harvard grads make $106 300

Question 4

Devise a strategy to minimize the costs of postsecondary education

Answer 4

• scholarships and financial aid - live at home and commute - make your own food instead of eating out - buy used textbooks - bike if you can - taking AP or IB courses, and using them as transfer credits - enlist in the military

Question 5

Identify individuals who could provide positive job references

Answer 5

• teachers - past employers - leaders of organizations you’ve volunteered with - community leaders (achen) avoid - family - friends - people you really don’t know

Question 6

Analyze how economic and other conditions can affect income and career opportunities and the need for lifelong training and education

Answer 6

• during a recession, you can take a pay cut to keep the job, and for job-searchers, it is very hard to find jobs, as co’s are letting people go - lifelong education and training ensures that any company would be willing to hire you, which can be helpful if you are laid off later in life - seasons affect employment - summer = kid influx - tech: can a machine replace your job?

Question 7

Discuss how non-income factors such as child-care options, cost of living and work conditions can influence job choice

Answer 7

• people with families may choose a job that is more steady, (9-5) so they can be with their children - you may choose jobs based on location, and how long it would take to commute - good benefits (insurance, child care) may increase interest in a potential job

Question 8

Describe the risks, costs and rewards of starting a business

Answer 8

risks: fin loss, failure rewards: satisfaction, self-employment costs: no benefits, stressful

Question 9

Outline the main components of a business plan

Answer 9

1. executive summary (like an abstract) 2. description of business 3. product or service 4. management 5. financial requirements

Question 10

Explain the difference between a wage and a salary

Answer 10

wage = daily basis. overtime = > 8hrs salary = yearly. no overtime

Question 11

Give examples of sources of income other than a wage or salary

Answer 11

tips = $ from customers to service sector workers dividends from stocks money earned from other investments inheritance gifts lottery money a business (money earned as profit)

Question 12

Explain the difference between earned and unearned income and give an example of each

Answer 12

earned income = commissions, rent unearned income = interest, dividends, profit

Question 13

Give an example of a situation that qualifies for a government transfer payment

Answer 13

gov transfer payment = welfare, SS, subsidies for certain businesses

Question 14

Explore how local government services assist people, such as those who are unemployed, elderly, disabled or low-income

Answer 14

• Social Security = pay into (pool) while working, given when in need - Medicare = health insurance for over 65 or young w disabilities - Unemployment benefits - food stamps - welfare - Medicaid = free/low $ medical benefits to low income people without medical insurance

Question 15

Give examples of employee benefits and explain why they are forms of compensation

Answer 15

• health plans - retirement plans - insurance - paid time off compensation includes salary, direct and indirect rewards and benefits employee is provided with in return for their contribution to the organization

Question 16

Differentiate between required employer contributions and additional benefits that an employer might offer

Answer 16

• employers must contribute to pension, FICA (federal insurance contributions act), and SS

Question 17

Calculate the future income needed to maintain a current standard of living

Answer 17

NO ANNUITIES - cmpd interest formula and replace A with FV and P with PV. - simple interest, use FV = PV (1+rt) ANNUITIES -

PV = C * (1-(1+i)^-n))/i

FV = C * (-1+(1+n)^n))/i

Question 18

Identify typical sources of income in retirement

Answer 18

SS, retirement accounts (like an IRA), pensions, home equity, stocks, annuities (which you can buy like insurance), savings accounts, a part-time job, rent/royalties, or an inheritance

Question 19

Differentiate between a progressive tax and a regressive tax

Answer 19

progressive tax = rate increases with taxable amount

regressive tax = rate applies equally to all

Question 20

Illustrate the relationship between income level and income tax liability

Answer 20

• as income rises, so does income tax liability. – deductions, excemptions and tax credits reduce tax liability

Question 21

Identify common types of payroll deductions

Answer 21

• taxes
• insurance
• donations to charity
• pension
• union dues

Question 22

Calculate how payroll deductions affect takehome pay

Answer 22

payroll deductions are subtracted from your take-home pay

Question 23

Summarize Social Security, Medicare and Affordable Care Act benefits

Answer 23

SS: gives monetary assistance to retirees, disabled people, and families of retired, disabled, or deceased workers

Medicare: health insurance for over 65 or young w disabilities

Affordable care act: Obamacare, attempts to reform healthcare system by providing americans with affordable health insurance, among other things

Question 24

Complete IRS form W-4 (Employee’s Withholding Allowance Certificate) to determine the optimal amount to withhold for personal income tax

Answer 24

withholding allowance is declared on form W-4. employers use this to determine how much employees pay to subtract from paycheck for taxes.

Question 25

List circumstances that make it prudent to adjust the income tax withholding allowance

Answer 25

you can adjust it if you got another job, married, divorced, your spouse got/changed jobs, or if you adopted or had a baby

Question 26

Differentiate between gross, net and taxable income

Answer 26

gross income is before tax

net income is after tax (net income = income - payroll deductions like FICA, income tax)

taxable income is the base income upon which the system imposes tax. Generally includes some/all types of income, and is reduced by expenses and other deductions

Question 27

Complete IRS Form 1040EZ, Form 1040 and applicable state income tax forms

Answer 27

IRS is Internal Revenue Service

form 1040EZ is an alternative to 1040, and offer a faster and easier way to file taxes, meant for taxpayers with rudimentary tax situations

form 1040 is an official document that can be used to file income tax return. divided into sections for reporting income and deductions to determine amount of tax you owe or the refund you can expect to recieve

Question 28

Examine the benefits of participating in employersponsored retirement savings plans and health care savings plans

Answer 28

health insurance: often tax free, less expensive, and covers a broader range

retirement savings plans: automatic savings device, tax breaks, and in some cases, offers free money (with employers matching employee’s contributions)