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income and taxes
| Term | Definition |
|---|---|
| Biweekly | Occurring or paid every two weeks. It is important to understand the biweekly payment schedule as it relates to income and taxes, as it differs from monthly or weekly pay periods. The frequency of payments affects the amount of income tax withheld from ea |
| Dependent | person who meets specific criteria, allowing a taxpayer to claim them as a dependent, which can lead to tax benefits. |
| Direct Deposit | is a secure, electronic method of transferring funds directly into a recipient's bank account, eliminating the need for paper checks. It is a specific type of transaction within the Automated Clearing House (ACH) network. |
| Earned Income | Earned income is any taxable income and wages a person receives from actively working for an employer or from a business they own or operate. It is distinct from unearned or passive income, which comes from investments, government benefits, or other sourc |
| Employee | person who works for or at a business |
| Employer | is an individual or organization that hires employees to work for them in exchange for wages or a salary |
| Exemptions | provides immunity, exception, or freedom from a liability, duty, or rule that others are typically required to follow |
| Federal Income Tax | is a progressive tax levied by the U.S. government on the income of individuals and corporations to fund public services and pay national debt. The tax system uses a series of brackets, with increasing rates applied to higher portio |
| FICA | s a mandatory payroll tax that funds both Social Security and Medicare, affecting every wage earner and their employers in the U.S. |
| Fringe Benefits | is a mandatory payroll tax that funds both Social Security and Medicare, affecting every wage earner and their employers in the U.S. |
| Gross Income | is the total amount of money an individual or business earns from all sources before any taxes or deductions are taken out. It is the starting point for calculating net pay and taxable income |
| Hourly Wage | amount of money paid per hour |
| Income Tax | tax on a employees income |
| Medicare Tax | is a U.S. federal payroll tax that funds the Medicare program, which provides health insurance primarily for individuals aged 65 and over and certain younger people with disabilities. It is a component of the Federal Insurance Contributio |
| Net Income | also known as net profit or the "bottom line," is the amount of money an individual or business has left after deducting all costs, expenses, interest, and taxes from total revenue. It is a key indicator of financial health and profitability |
| Overtime Pay | is compensation for hours worked over 40 in a workweek, mandated for non-exempt employees by the Fair Labor Standards Act (FLSA). The overtime rate must be at least 1.5 times (time-and-a-half) the employee's regular hourly rate. If an employe |
| Profit Sharing | is an employee benefit where an employer distributes a portion of the company's profits to its employees. The main benefits include motivating employees, helping them save for retirement, and providing a flexible compensation tool for the e |
| Salary | a fixed, regular payment from an employer for work performed, often paid monthly or biweekly, but typically expressed as an annual figure |
| Sales Commissions | a form of compensation paid to employees for completing a task, typically selling goods or services |
| Social Security Tax | is a mandatory federal payroll tax that funds the Social Security program, providing retirement, disability, and survivor benefits. It is part of the Federal Insurance Contributions Act (FICA) tax |
| Tax Deduction | is an amount that is subtracted from your gross income to arrive at your taxable income, thereby lowering your overall tax bill. This differs from a tax credit, which directly reduces the amount of tax you owe, dollar-for-dollar. |
| tips | discretionary payments to employees, inflation-protected securities (TIPS) for investors, or a responsible alcohol service training program |
| W2 Form | Wage and Tax Statement, is an official IRS tax document that an employer must provide to each employee and the Social Security Administration (SSA) annually |
| W4 Form | is used to tell your employer how much federal income tax to withhold from your pay |
| Withholding | is the process where an employer (or other income payer) deducts a portion of an individual's income, such as wages, pensions, or bonuses, and sends it directly to the government to cover tax liabilities |
Created by:
lsnow27
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