The phrase living paycheck to paycheck means a person spends nearly all earnings on expenses and has little savings in the event of a financial emergency. Fact or fiction?
Fact
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15
If two employees earn the same gross pay, then they must receive the same net pay. Fact or fiction?
Fiction: Depending on their specific paycheck withholdings, their net pay may differ even if their grosspay is the same.
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15
From each paycheck, 6.2% of a workerโs gross pay is withheld for Social Security (retirement and disability benefits) and 1.45% is withheld for Medicare (health care for those over 65). Fact or fiction?
Fact
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15
A workerโs net pay is smaller than gross pay. Fact or fiction?
Fact: Net pay is gross pay minus deductions and taxes; therefore, net pay is smaller than gross pay.
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15
A direct deposit occurs when an employer electronically transfers money into the workerโs designated bank account on payday; the worker does not receive a paper paycheck. Fact or fiction?
Fact
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15
It is important that workers review their pay stubs to check for errors. Fact or fiction?
Fact
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15
Minimum wage earners tend to be younger in age and work part-time hours. Fact or fiction?
Fact
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15
The most common pay period of private (nongovernment) U.S. businesses is monthly. Fact or fiction?
Fiction: The most common pay period for private U.S. businesses is biweekly (every 2 weeks), followedby weekly.
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15
A worker earned $5,000 in base pay and $1,000 in overtime last month. The employer withholds $2,000 (for taxes, health insurance, and a 401(k) plan). The net monthly pay is $4,000. Fact or fiction?
Fact: Net pay is gross pay minus withholdings. In this case, gross pay is $6,000ย and withholdings are $2,000, so net pay = $6,000 โ $2,000 = $4,000.
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15
All U.S. employers must issue paychecks to workers each week. Fact or fiction?
Fiction: The frequency of paychecks varies from company to company but must comply with state laws.
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15
Health insurance premiums, union dues, and retirement plans like 401(k)s are all types of paycheck deductions that can decrease a workerโs net pay. Fact or fiction?
Fact
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15
If workers do not have a bank account, they can cash a paycheck at a check-cashing service or at some banks, but they will likely be charged a fee for doing so. Fact or fiction?
Fact
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15
Only workers over the age of 65 must have Medicare taxes withheld from paychecks. Fact or fiction?
Fiction: Although Medicare provides health care for those over age 65, all workers must pay the tax.