Calculating Net PayDepartment of Education

Office of the CommissionerDivision of Human Resources

Alscess Lewis-Brown, Director-Division of Human ResourcesJoy A. C. Williams, Assistant Director- STX

Nicole Jacobs, Acting Assistant Director – STTJ

By: Carmen M Miray MarcanoResource Specialist

Important Terms

School Calendar Year Refers to the 10 month school year beginning in late

August and ending in early June. Calendar Year

Refers to year beginning in January ending in December. Prorating

To divide, distribute, or assess proportionately. Annual Salary

Total of yearly gross payments. Gross Pay

Total pay before deductions, reductions and taxes have been subtracted.

Net Pay Take - home pay after reductions, taxes and deductions have been

subtracted from your gross pay.

This presentation will based on a teacher’s

Annual Salary.

Formulas in this presentation hold true for all Annual Salaries.

Teacher’s Approximate Annual Salary

Pay Scale BA + 5 years BA + 10 years

Annual Salary $32,841.00 $38,519.00

Your Annual Salary is Prorated

As a teacher, your position requires your presence on planning days and on school calendar days, you will therefore work 190

days (10 months).

Prorated Salary When you are hired you are given an

annual salary based on a complete contract year.

A complete contract year for a teacher begins in August and ends in June;

Annual salary however, is prorated into 26 pay periods covering the entire Calendar year.

Prorated Salary If you begin working after the beginning of

the school year calendar, your salary will be prorated based on the number of days you will actually work.

Your pay periods will be prorated to end at the end of the contract year (June).

Prorated Salary Formula for Salary prorating:

a. Your annual salary is ___________.

b. Your position is_______ days.

c. Your daily rate of pay is _____ (A divided by B).

d. You will work _____ days (based on your beginning date).

e. You will earn _____(C multiplied by D).

f. This will be divided equally by ___checks (number of pay periods remaining in the contract year).

g. Your gross pay per pay period will be ___(E divided by F).

Estimated Prorating Formula for Salary prorating:

a. Your annual salary is ___________.

b. Your position is_______ days.c. Your daily rate of pay is _____

(A divided by B).d. You will work _____ days (based

on your beginning date).e. You will earn _____(C multiplied

by D).f. This will be divided equally by

___pay periods (number of checks remaining in the contract year).

g. Your gross pay per pay period will be ___ (E divided by F).

Estimated Prorating BA + 5 years

a.a. Annual Salary : $32, 841.00Annual Salary : $32, 841.00b.b. 190 days190 daysc.c. 32841/190 =$172.85 per day32841/190 =$172.85 per day

d.d. 114 (Estimated days beginning in 114 (Estimated days beginning in January)*January)*

e.e. $172.85 x 114 = $19,704.90*$172.85 x 114 = $19,704.90*

f.f. 13 pay periods remaining 13 pay periods remaining (beginning in January ending (beginning in January ending June)June)

g.g. $19,704.90 / 13 = $1,515.76* $19,704.90 / 13 = $1,515.76* (estimated gross pay ending June)(estimated gross pay ending June)

*Estimate reflects special condition of mid school year employment.

Lump Sum Summer Prorated Payment If you are a teacher, who has worked from the

beginning of the school year, and wish to have the remainder of your teachers’ annual salary awarded to you in a lump sum, you may request this in writing to the Payroll Office by May 15.

It is important to note here that lump sum payments are taxed 28% and above in accordance Internal Revenue rules and regulations. In addition, fringe benefits are also deducted in a lump sum.

Calculating my net pay….

Gross Pay Gross pay is your total pay before

deductions, reductions and taxes have been subtracted.

Net Pay Net pay is your take-home pay after

reductions, taxes and deduction have been subtracted from your gross pay.

Formula for Deductions

(Gross Pay) (% of deduction) = Amount of deduction

Gross Pay – Total Amount of Deductions = Net Pay

Required DeductionsFederal Tax

Social Security Tax

Retirement Plan

Federal Income Tax (Withholdings)

Federal Income Tax Most types of US source income,

even when received by a foreign person, are subject to US tax of twenty one (21%) to thirty percent (30%) depending on the gross salary of the employee.

Social Security Federal Income Tax Withholdings

inherently include your Social Security Tax. This tax is a 7.65% of your yearly gross income.

This contribution is mandatory through the “Federal Insurance Contribution Act” (FICA) and it is therefore irretrievable upon leaving the United States Employment System.

Federal Tax Withholding(21% - 30%)

Social Security Tax(7.65%)

Federal Income Tax(% will vary)

Deduction Sample

(Gross Income) x (%) = Deduction

(Social Security) $32,841.00 x .0765 = $2,512.34

(Internal Revenue) $32,841.00 x .1335 =$4,328.27

+_________

Total Tax payment $6,840.61

Retirement Plan (Withholdings)

8% of Gross Salary deductions are automatic for anyone under the age of 55 coming into the USVI Government Employment System to the VI Retirement System.

Retirement Deduction Sample

(Gross Income) x ( % Retirement)

$32,841.00 x .08 =

$2,627.28

Retirement Plan (Withholdings)

If at any time the employee resigns the USVI Government Employee System, they may retire their investment with an increase of 4% on their total investment.

Example: Total Investment x 4% increase

$2,627.28 x .04 = $105.09Total Retrieved upon resignation:

$2,732.37

Taxes and Retirement Withholdings

Approximate Net Income

Pay Scale BA + 5 years BA + 10 years

Annual Salary $32,841.00 $38,519.00

Social Security (7.65%) $2,512.34 $2,946.70

Internal Revenue (13.35%) $4,384.27 $5,142.29

Retirement (8%) $2,627.28 $3,082.52

Medical Insurance Withholding Medical insurance withholding will vary

according to the employee’s need for coverage, dependents and choice of coverage options.

All beneficiaries must be added during the open enrollment period, or within thirty days of birth or marriage.

In all other cases changes will have to wait until the following registration period during the month of August.

Approximate Net Income

Pay Scale BA + 5 years BA + 10 years

Annual Salary $32,841.00 $38,519.00Social Security (7.65%) $2,512.34 $2,946.70

Internal Revenue (13.35%) $4,384.27 $5,142.29

Retirement (8%) $2,627.28 $3,082.52

Medical Insurance Withholding * Based on single coverage

$1,985.20 $1,985.20

Total Withholdings: $11,509.09 $13,156.71

Net Pay $21,331.91 $25,363.29

Authorized Deductions Charitable Contributions Payments to Fiscal Institutions Air Ambulance Service* AFT dues (Dues paid to the Federation

of Teachers)*

*Italicized represent common choices of authorized deductions.

Authorized Deductions

Per Year

Air Ambulance (estimate) $117.96

AFT Dues $292.50

Total Authorized Deductions: $410.46

The above represent common choices of authorized deductions.

Approximate Net Income

Pay Scale BA + 5 years BA + 10 years

Annual Salary $32,841.00 $38,519.00Social Security (7.65%) $2,512.34 $2,946.70

Internal Revenue (13.35%) $4,384.27 $5,142.29 Retirement (8%) $2,627.28 $3,082.52 Medical Insurance * Based on single coverage $1,985.20 $1,985.20

Total Withholdings: $11,509.09 $13,156.71

Net Pay $21,331.91 $25,363.29

Authorized Deductions $410.46 $410.46Net Pay with Authorized Deductions

$ 20,921.45 $24,952.83

* All Values are estimated.

Estimated Net Pay with Authorized Deductions

Net Pay with Authorized Deductions

BA + 5 years

$20,921.45

BA + 10 years

$24,952.83

Estimated Monthly NP

$1,743.45 $2,079.40

Estimated

Bi-weekly NP

(26 pay periods)

$804.67 $959.72

Government Investment per Employee

The Government of the USVI must pay the following for each employee:

Annual Salary Social Security Payment FUTA (Federal Unemployment Tax) SUTA (State Unemployment Tax) Retirement Investment Medical Insurance

Government Investment per Employee

Government as the Employer must pay: 7.65% of Gross payment in FICA (Social Security

Tax); 6.2% of Federal Unemployment Tax (until the

employee has collected $7,000) 5.4% of State Unemployment Tax (until the

employee has collected $7,000) 14.5% of Gross payment as Retirement Investment 65% of the Total Yearly payment of Medical

Coverage Chosen by employee

Formulas for Estimated Total Government Investment

Gross Payment x .0765 = FICA (Social Security)

Gross Payment x .145 = Retirement

$7,000 x .062 = FUTA (Federal Unemployment Tax)

$7,000 x .054 = SUTA (State Unemployment Tax)

65% of Medical Coverage selected by Employee

Estimated Government Investment per Gross Pay

Pay Scale BA + 5 years BA + 10 years

Annual Salary $ 32,841.00 $ 38,519.00

Social Security (7.65%) $ 2,512.34 $ 2,946.70

Retirement (14.5%) $ 4,761.95 $ 5,585.26

SUTA (State Unemployment Tax)(5.4%)* $ 378.00 $ 378.00

FUTA (Federal Unemployment Tax)(6.2%)* $ 434.00 $ 434.00

Medical Insurance* (65% of total cost) $ 3,275.58 $ 3,275.58

Estimated Yearly Investment $ 44,202.86 $ 51,138.54

*Medical Insurance estimated for Single Coverage.

*Paid while employee has made less than $7,000

Questions?Please contact:

USVI Department of Education, Division of Human Resources

teachusvi@doe.vi

340-773-1095340-774-0100

Welcome to the United States Virgin Islands Department of Education!

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The End

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