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Earning Power: More Than a Paycheck

Lesson 3-3 Pay and Taxes

If your job pays $8 an hour and you work 20 hours, your paycheck will be $160, right? The reality is, what you earn is not the same as what you actually receive to spend as you wish. After taxes and other items are deducted from your paycheck, you will have less money in hand to save, spend, or invest.

What You’ll LearnAssess factors that impact take-home pay and tax liability. 

Taking it Home

  • Take a close look at one of your recent paystubs to see how payroll information is recorded. Keep your paystubs to match up data on the W-2 Wage and Tax Statement you receive from your employer at the end of the year. This information is needed when filing your income taxes.

Learn More

  • Practice filling out an income tax form. You can find simulations for several situations on the IRS.gov Understanding Taxes student website.
  • Know the special rules related to teen employment. Check out Youth Rules, a website hosted by the U.S. Department of Labor. The site provides current information about federal and state youth labor laws, including the hours youth can work, the jobs youth can do, and how to deal with any employment violations. Share this information with your peers.

Related Resources


Talking Points for Parents

While your teen is learning about income and careers, consider ways to reinforce learning from home.

  • If your teen is employed, work together to set up a routine to verify each paystub for accuracy. Agree on a process to collect payroll documentation needed to complete the annual income tax forms. 
  • Look over one of your teen’s recent paystubs to verify that your teen can explain the purpose of the data and meaning of terms and abbreviations.