doing math

courses › Bookkeeping

Payroll Basics

level 29 course

Gross pay, overtime, deductions, and pay periods, using stated made-up rates.

Pen and paper is fine · no calculator needed why?

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the lesson

The idea, the techniques and a tip for each skill, right here. The Learn page adds worked examples for every skill and untimed practice.

Read the lesson · about 3 minutes

The idea

Gross pay is what an employee earns before anything is taken out. Net pay is what reaches their bank account after withholdings (taxes held back) and deductions like health insurance. Real rates vary by place and change over time, so the rates here are always stated as assumptions.

Hourly pay is hours times the rate, and overtime hours earn a higher rate. A salary is a yearly amount. A full-time year counts as 2,080 hours (40 hours × 52 weeks), and the salary is split across a set number of paychecks.

Techniques

Regular hours, then overtime

Hours over 40 are paid at 1.5 times the rate.

  1. Pay up to 40 hours at the regular rate.
  2. The overtime rate is the rate times 1.5.
  3. Pay only the hours over 40 at that rate, then add.
worked example

Example: An employee earns $18 an hour and works 44 hours this week. Assume hours over 40 are paid at 1.5 times the rate. What is gross pay?

  1. Regular: 40 × $18 = $720.
  2. Overtime rate: $18 × 1.5 = $27.
  3. Overtime: 4 × $27 = $108.
  4. Gross: $720 + $108 = $828.

Answer: $828

Gross down to net

A percent withheld for taxes, plus a fixed deduction.

  1. Taxes withheld are gross pay times the percent.
  2. Subtract the taxes and every fixed deduction from gross pay.
worked example

Example: Gross pay is $1,500. Assume 10% of gross pay is withheld for taxes, plus $50 for health insurance. What is net pay?

  1. Taxes: $1,500 × 0.1 = $150.
  2. Net: $1,500 − $150 − $50 = $1,300.

Answer: $1,300

Divide by the right count

Turning a salary into an hourly rate or pay per paycheck.

  1. Hourly: divide the salary by 2,080.
  2. Per paycheck: weekly is 52 paychecks, every two weeks 26, twice a month 24, monthly 12.
worked example

Example: An annual salary of $48,000 is paid twice a month. What is gross pay per paycheck?

  1. Twice a month is 24 paychecks.
  2. Per paycheck: $48,000 ÷ 24 = $2,000.

Answer: $2,000

Tips by skill

  • TipGross pay with overtime: Pay up to 40 hours at the rate, and only the hours past 40 at 1.5 times the rate.
  • TipNet pay after deductions: Taxes are the stated percent of gross. Subtract them and each fixed deduction from gross pay.
  • TipSalary to hourly: A full-time year is 2,080 hours. Divide a salary by it, or multiply an hourly rate by it.
  • TipPay per paycheck: Divide the salary by the paychecks a year: weekly 52, every two weeks 26, twice a month 24, monthly 12.

Watch out for

  • Paying every hour at the overtime rate, or none of them. Only the hours over 40 earn it.
  • Forgetting the fixed deduction after taking out the taxes.
  • Dividing a salary by 52 to get an hourly rate. That gives weekly pay.
  • Mixing up every two weeks (26 paychecks) with twice a month (24).

skills · practice stats

From rounds of this course only: box, review and test-out answers are left out. Once a skill has 40 tries, it compares your first 20 tries with your last 20.

rest ladder

Win 3 of your last 4 rounds and the course rests. A win is 90% right, within 2× the round's par. Pass the review when it comes back and the next rest is longer.

  1. 1 day
  2. 3 days
  3. 7 days
  4. 14 days
  5. 30 days
  6. 60 days
  7. mastered · every 90 days

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