Filling Out The Paperwork For Your First Job
After the interview, salary negotiation, and offer letter, you're not done with the hiring process for your first job. You will have to fill out paperwork to handle some of the financial details of your new job. Here are some of the items you need to address:
Income Tax Withholding - Unless you are hired as an independent contractor, every paycheck will have federal (and state) income tax withheld. By having tax withheld, you will not have to pay everything all at once when you file your tax return. To determine the amount your employer will withhold, you will have to complete the IRS Form W - 4.
Social Security and Medicare Withholding - Your wages are subject to Social Security and Medicare taxes that will be withheld from each paycheck. Currently, you will pay Social Security tax of 6.2% on your wages up to $94,200 and a Medicare tax of 1.45% on all your wages. Your employer pays an equal amount. If you are an independent contractor or self employed, you are responsible for both amounts.
Direct Deposit - Instead of receiving a paper paycheck, you can have the funds deposited directly into your bank account. This saves the time of going to your financial institution, waiting in line and cashing the check. It is also safer and gets your money working for you even faster.
Retirement Plan - If your employer has a retirement plan like a 401(k) plan, enroll and participate as soon as you are eligible. That way, you will be automatically setting aside some savings from each paycheck. Generally, you have the ability to decide how much you want to contribute and how you want your funds invested. Your plan may also have a provision where the employer matches some or all of your contributions. Be aware of the details and try to get the entire match. Learn about your investment options and try to diversify into a few investments.
Other Employee Benefits - Many employers also offer health insurance, life insurance and disability insurance. These policies are usually much cheaper if you get them from your employer than if you buy them as an individual.