Lesson 2: Wages, W-4, and W-2

W-4

A federal tax form filled out by an employee to indicate the amount that should be withheld from his/her paycheck for taxes.

W-2

A statement of an individual's annual wages and taxes provided by an employer that must be included with the employee's federal, state, and city income tax returns.

Deductions

Amounts subtracted from your gross pay.

wages

An amount of money paid to an employee at a specified rate per hour worked

Self-employed

An individual who works for himself or herself instead of working for an employer.

Income

Earnings from work or investment

Employee Benefits

Employers may offer employee benefits in the form of products or services that add extra value for employees beyond earned wages

FICA taxes

Payroll taxes withheld to provide Social Security and Medicare benefits

Taxes

Required payments to a government

Income Tax

Tax paid to the state, federal, and local governments based on income earned over the past year.

1099-NEC

Tax reporting form for independent contractors or workers whose employers do not report withheld taxes.

Withholdings

Taxes are forwarded to the government and may include federal, state, and local income taxes

Rate (Rate of Pay)

The amount of money paid to an employee per unit of time worked. Example "$10 per hour" or "350 per week"

United States Treasury

The federal department that collects revenue (taxes) and issues refunds for overpayments

Take-home Pay

amount of a paycheck one gets to keep after taxes and other deductions are taken out

Independent Contractor

any person who agrees to perform a service for a fee and who is not subject to the control of those for whom the service is performed; not an employee

Year to Date (YTD)

begins with the first date of the calendar year to present date

Net Pay

the amount of a paycheck after the deductions are taken out

Pay Period

the amount of time over which an employee is paid

Gross Pay

the total amount of an employee's earnings before deductions are taken out