WalletPrep

Work and income: lesson plans

Get paid what you are worth, use your benefits and handle taxes when you work for yourself. 10 lessons, about 45 minutes each, in the order students should take them.

  1. 1

    How to negotiate your salary

    Research the pay range, counter with one specific number, and negotiate before you accept. Employers expect it.

    Students will be able to

    • Research the range before you talk numbers.
    • Counter with one specific number.
    • A higher start grows every year.

    45-minute plan

    1. Warm-up (5 min): is this true? "If I ask for more money, they'll take the offer back."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Look up your job title and metro area in the BLS wage data and write down the median and the upper range. Pick your three numbers: thrilled, happy and walk away.

    Worksheet and answer keyOpen the lessonFederal income tax calculator

  2. 2

    How to compare job offers

    Add salary and the 401(k) match, subtract health premiums and commuting costs, then compare the totals side by side.

    Students will be able to

    • Count the 401(k) match as pay.
    • Subtract what you'd pay for health insurance.
    • Price the commute and the hours.

    45-minute plan

    1. Warm-up (5 min): is this true? "The offer with the higher salary is the better offer."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Make a two-column table for your offers with salary, match, yearly premiums and commute cost. Add and subtract to get each offer's full yearly value, then ask HR for anything you can't fill in.

    Worksheet and answer keyOpen the lessonFederal income tax calculator

  3. 3

    What to do during open enrollment

    Compare health plans on premiums plus likely care costs, re-elect your FSA, and check life insurance and beneficiaries before the deadline.

    Students will be able to

    • Compare total cost, not just premiums.
    • Most FSA elections don't roll over.
    • After the window closes, you usually wait.

    45-minute plan

    1. Warm-up (5 min): is this true? "I'll just keep last year's plan. Nothing really changes."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Find your open enrollment deadline and put it in your calendar. Then write down each health plan's yearly premium, deductible and out-of-pocket maximum, and figure a typical year and a bad year for each.

    Worksheet and answer keyOpen the lesson

  4. 4

    What to do with a raise

    Find the raise's after-tax amount per paycheck, automate at least half into saving or debt, then enjoy the rest.

    Students will be able to

    • You keep less than the raise.
    • A higher bracket doesn't shrink your pay.
    • Move half before the first bigger check.

    45-minute plan

    1. Warm-up (5 min): is this true? "A raise could bump me into a higher tax bracket and I'd take home less."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Work out your raise after tax per paycheck, then log in to your 401(k) or bank and move at least half of it with an automatic contribution or transfer that starts with the next check.

    Worksheet and answer keyOpen the lessonFederal income tax calculator

  5. 5

    What's the difference between W-2 and 1099 work?

    W-2 means an employer withholds tax and pays half of payroll tax. 1099 means you pay it all yourself.

    Students will be able to

    • Employees split payroll tax with the employer.
    • Contractors pay both halves themselves.
    • The job decides, not the form.

    45-minute plan

    1. Warm-up (5 min): is this true? "A 1099 job paying the same as a W-2 job means the same money in my pocket."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): If you have any 1099 income, open a separate savings account for taxes and set an automatic transfer of 25% of each payment. Then run your expected profit through the self-employment tax calculator below.

    Worksheet and answer keyOpen the lessonSelf-employment tax calculator

  6. 6

    How to calculate self-employment tax

    Multiply net profit by 92.35%, then by 15.3%. Pay it during the year with quarterly estimated payments.

    Students will be able to

    • The rate is 15.3% of 92.35% of profit.
    • Profit is income minus business expenses.
    • Half of it is deductible.

    45-minute plan

    1. Warm-up (5 min): is this true? "I only owe tax on side gig money if a client sends me a 1099."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Add up your self-employment profit so far this year and run it through the calculator below. Then schedule your next estimated payment in your IRS online account for the coming due date.

    Worksheet and answer keyOpen the lessonSelf-employment tax calculator

  7. 7

    How do quarterly estimated taxes work?

    Pay four times a year. Dividing last year's total tax by 4 usually keeps you clear of the underpayment penalty.

    Students will be able to

    • Four due dates, roughly every quarter.
    • Last year's tax is your safe number.
    • Under $1,000 owed means no penalty.

    45-minute plan

    1. Warm-up (5 min): is this true? "I can just pay everything when I file in April, like everyone else."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Find the total tax line on last year's Form 1040, subtract any withholding you expect this year, and divide by 4. Put the four due dates in your calendar and open a separate savings account for tax money.

    Worksheet and answer keyOpen the lessonSelf-employment tax calculator

  8. 8

    How to save for retirement when you're self-employed

    Start with an IRA, then add a SEP IRA or solo 401(k). The solo 401(k) usually allows the most at moderate incomes.

    Students will be able to

    • Self-employed SEP math uses 20%, not 25%.
    • A solo 401(k) has two parts.
    • Everything together caps at $72,000.

    45-minute plan

    1. Warm-up (5 min): is this true? "Freelancers don't get a 401(k), so an IRA is all I can do."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Take last year's Schedule C net profit, subtract half of your self-employment tax and multiply by 20%. That is your SEP figure. Add the employee deferral to see your solo 401(k) room, then pick a plan.

    Worksheet and answer keyOpen the lessonSelf-employment tax calculator

  9. 9

    What to do after a layoff

    File for unemployment, secure health coverage, cut to essentials, count your runway and don't cash out your 401(k).

    Students will be able to

    • File for unemployment in the first week.
    • You have 60 days for health coverage.
    • Count your runway in months.

    45-minute plan

    1. Warm-up (5 min): is this true? "I should cash out my 401(k) now so I have money to live on."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): File your unemployment claim, then write your monthly essentials on one page. Subtract your expected benefits and divide your cash plus severance by the gap. Put that runway number where you'll see it.

    Worksheet and answer keyOpen the lessonEmergency fund calculator

  10. 10

    How do unemployment benefits work?

    File with the state where you worked right away. Benefits replace part of your pay, are taxable and need weekly claims.

    Students will be able to

    • File in the state where you worked.
    • Benefits replace only part of your pay.
    • Unemployment checks are taxable income.

    45-minute plan

    1. Warm-up (5 min): is this true? "Unemployment is for people who did something wrong, so I shouldn't take it."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Open the CareerOneStop Unemployment Benefits Finder, pick the state where you worked and save its claim page. If you've lost your job, file today and choose the 10% federal withholding.

    Worksheet and answer keyOpen the lessonEmergency fund calculator

Unit vocabulary

Marginal tax rateEmployer matchTake-home payVesting401(k)Flexible spending accountBeneficiaryOpen enrollmentLifestyle creepSavings rateStandard deductionEmergency fundTax withholdingIndependent contractorSelf-employment taxAdjusted gross incomeUnemployment insuranceSchedule CEstimated tax paymentsRefundable tax creditSafe harbor ruleForm W-4IRASEP IRASolo 401(k)Roth IRATraditional IRAIrregular incomeCOBRARolloverSpecial Enrollment PeriodBase periodGross income

Free to print, copy and share for non-commercial classroom use. General education, not personalized financial, tax or legal advice. Figures are examples. Check current rates and limits before you act.