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Income and Taxes
| Term | Definition |
|---|---|
| BiWeekly | a payment schedule where you make half your normal monthly payment every other week |
| Dependant | an individual who relies on another person for primary financial support to cover basic living expenses |
| Direct Deposit | the electronic transfer of funds from one bank account to another. |
| Earned Income | the monetary or in-kind compensation obtained from active participation in a work activity, trade, or business. |
| Employee | a person employed for wages or salary, especially at nonexecutive level. |
| Employer | a person or organization that employs people. |
| Exemptions | the process of freeing or state of being free from an obligation or liability imposed on others. |
| Federal Income Tax | a mandatory payment to the U.S. government, levied by the Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, and other legal entities |
| FICA | Federal Insurance Contributions Act, a U.S. federal law requiring a mandatory payroll tax to fund the Social Security and Medicare programs. |
| Fringe Benefits | non-wage compensation, like health insurance, retirement plans, paid time off, or perks, that employees receive in addition to their regular salary |
| Gross Income | the total amount of income an individual or business receives from all sources before any taxes, deductions, or expenses are taken out |
| Hourly Wage | the set amount of money an employee earns for each hour they work |
| Income Tax | a mandatory government levy on the annual earnings or profits of individuals and businesses |
| Medicare Tax | a mandatory federal payroll tax used to fund the Medicare program, which provides health insurance |
| Net Income | the money left over after all expenses, taxes, and deductions are subtracted from total earnings |
| Overtime Pay | extra compensation for work performed beyond a standard schedule |
| Profit Sharing | when a company distributes a portion of its profits to employees, often as a retirement benefit or bonus |
| Salary | a fixed regular payment, typically paid on a monthly or biweekly basis but often expressed as an annual sum |
| Sales Commissions | a form of performance-based compensation paid to a salesperson for successfully completing a sale |
| Social Security Tax | a mandatory U.S. federal payroll tax that funds the Old-Age, Survivors, and Disability Insurance (OASDI) program |
| Tax Deduction | an amount that a taxpayer can subtract from their total (gross) income to arrive at their taxable income |
| Tips | a small sum of money given to someone as a reward for performing a service, such as serving in a restaurant. |
| W2 Form | IRS document that U.S. employers are required to provide to each employee and the Social Security Administration (SSA) annually |
| W4 Form | an Internal Revenue Service (IRS) tax form that an employee completes to inform their employer of their tax situation |
| Withholding | the practice of an entity deducting money from a payment and sending it directly to the government as a prepayment of the recipient's tax liability |
Created by:
ncross26
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