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Income and Taxes
| Term | Definition |
|---|---|
| BiWeekly | you receive money every two weeks or twice a week |
| Direct Deposit | electronic transfer of a payment directly from the account of the payer to the persons account |
| Earned Income | money derived from paid work |
| Employee | a person employed for wages or salary |
| Employer | a person or organization that employs people |
| Exemptions | the process of freeing or state of being free from an obligation imposed on others |
| Federal Income Tax | the tax levied by the IRS on the annual earnings of individuals and other legal entities |
| FICA | Federal Insurance Contribuations Act. the money that is taken out of workers paychecks to pay older Americans their Social security retirement and medicare. |
| Fringe Benefits | an extra benefit supplementing an employees salary |
| Gross Income | the sum of all wages, salaries, profits and other forms of earnings before any deductions or taxes |
| Hourly Wage | the amount of money you are earning by the hour |
| Income Tax | tax levied by a government directly on income |
| Medicare Tax | a tax on wages that U.S employers are liable to withhold from employees paychecks to cover the cost of the medicare program |
| Net Income | the amount of revenue left after subtracting all expenses, taxes and costs |
| Overtime Pay | the amount of overtime paid to each employee in a pay period |
| Profit Sharing | a system in which the people who work for a company receive a direct share of the profits |
| Salary | a fixed regular payment, typically paid on a monthly or biweekly basis, annual sum |
| Sales Commissions | additional compensation the employee receives for meeting and exceeding the minimum sales threshold |
| Social Security tax | the tax levied on both employers and employees to fund the social security program |
| Tax deduction | a reduction of income that is able to be taxed and is commonly a result of expenses |
| Tips | is a sum of money customarily given by a client or customer to certain service sector workers for the service they performed |
| W2 Form | form that an employer must send to and employee and the internal revenue service at the end of each year. It is the official wage and tax statement that reports and employees annual wages and the amount of taxes withheld from their paycheck |
| W4 Form | An internal revenue service tax form completed by an employee in the united states to indicate his or her tax situation to the employer |
| Withholding Allowance | refers to an exemption that reduces how much income tax an employer deducts from an employees paycheck. the employer then uses the W-4 information to determine how much of an employees pay to subtract from their paycheck to remit to the tax authorities |
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