Money Basics 4 min read

Reading your first paycheck

You worked 20 hours at $15/hour… so why isn't your check $300? Meet taxes.

Gross vs. net pay

Gross pay is what you earned before anything is taken out. Net pay (take-home) is what actually lands in your account.

What gets taken out

FICA (7.65%) funds Social Security and Medicare. Federal income tax and maybe state tax come out too, depending on how much you earn and where you live.

Many teens earn little enough that they get most or all federal income tax back when they file a tax return — so file!

The W-4 form

When you start a job you fill out a W-4. It tells your employer how much tax to withhold. Ask a parent or manager to walk through it with you.

Real example

Sam's grocery store check

Sam, 16, works 20 hours at $15/hour in a state with no income tax.

Gross pay: $300.00
FICA (7.65%): −$22.95
Federal withholding: −$8.00
Net (take-home): $269.05

Remember this

Gross = earned; net = what you take home.
FICA is 7.65% of almost every paycheck.
File a tax return — you may get withheld tax back.

See what things cost in work hours

Quick quiz

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