Taxes

Net Pay

the amount of money left after all deductions have been withheld from the gross pay earned in the pay period. Also called "take home pay"

Deductions

the amount of money subtracted from the gross pay earned for mandatory systematic taxes, employee sponsored medical benefits, and or retirement benefits

Medicare Tax

the is the nation's health care policy for elderly and disabled. The Tax Rate is 1.45% of Gross Pay

Pay Period

the length of time for which an employee's wages are calculated; most are weekly, bi-weekly, twice a month, or monthly

Paycheck

the most common method payment for employees

Gross Pay

the total amount of money earned during a pay period before deductions

Taxes

these are charges imposed on citizens by local, state, and federal government

Allowances

these are used to determine the amount of federal taxes withheld from a paycheck

IRS

they collect federal taxes, issue regulations, and reinforce tax laws written by the United States Congress

Payroll

this type of card electronically carries the balance of the employee's net pay

W-4

Fill out before you start your job so that your employer can withhold the correct federal income tax from your pay check.W-4 is a form filled out by an employee when they start employment. Allowances on a W- 4 can be updated at any time by filling out a new one. The W-4 form provides information your employer needs to determine the correct amount to withhold from your paycheck.

W-2

Form your employer must send at the end of the year. The form reports an employee's annual wages and the amount of taxes withheld from his or her paycheck.A tax form prepared by an employer and given to an employee to be filed to report the taxes, listing wages earned during that year, federal and state taxes withheld, and Social Security tax information. Employers must provide employees their W-2 forms by the deadline that is set by the IRS

FICA

Law that enforces both employees and employers to fund Social Security and Medicare of Federal programs that provide benefits for retirees, the disabled, and children of deceased workers

Earning

Money or income received in exchange for labor or services.

Social Security Tax

The Tax Rate is 6.2% of Gross Pay. Provides benefits for retired workers and their dependents as well as for the disabled and their dependents. Also known as the "Federal Insurance Contributions Act" (FICA) tax. Social Security benefits include old-age, survivors, and disability insurance (OASDI); Medicare provides hospital insurance benefits for the elderly. The amount that one pays in payroll taxes throughout one's working career is associated indirectly with the social security benefits annuity that one receives as a retiree

Paycheck Stub

a document receipt included each pay period which outlines paycheck deductions, amount earned and net pay

Dependent

a person who relies 50% or more on the tax payer for financial support

Federal Tax

this withholding tax is the largest deduction withheld from an employee's gross income The federal government levies a tax on personal income. The federal income tax provides for national programs such as defense and interest on the national debt. Federal income taxes is based on marital status, pay period, # of allowances, and gross pay . Federal Income Tax : varies by pay, marital status, and # of allocations claimed (see tax table)

State Tax

this withholding tax percentage is deducted depending on the amount of gross pay earned