Unit 2: Payroll Taxes

taxes

compulsory (required to do it) payments to government by householding and business

wage

payments for labor services that are directly tied to time worked, or to the number of units of output produced

withholding allowance

Employee-claimed exemptions on the tax form employers use to determine how much of an employee's pay to subtract from his or her paycheck to remit to the tax authorities. The more allowances you claim, the less income tax will be withheld from your paycheck.

social security and medicare

are the two federally imposed taxes that make up FICA

medicare tax

a federal government tax that pays for medical care for retired persons 1.45%

social security tax (OASDI)

a federal government tax that pays income to old age survivors (over 66) or disabled americans 6.2%

salary

a regular payment, often at monthly or biweekly intervals, made by an employer to an employee, especially in the case of professional or white-collar employees. Salaries are paid for services rendered and are not based on hours worked.

federal withholding

deductions from gross pay for federal income tax payments

state deduction tax

deductions from gross pay state income tax payments Virginia's state income tax rate is 5.75%

standard deduction

is a dollar amount that non-itemizers may subtract from their income and is based upon filing status

single, married filing separately, married filing jointly and head of household

the 4 filing categories when filing income taxes

W2 form

is a statement that must be prepared by employers each year for employees, showing the employee' total gross earnings, Social Security earnings, Medicare earnings, and federal and state taxes withheld for the employee.

W4 form

an Internal Revenue Service (IRS) form you complete to let your employer know how much money to withhold from your paycheck for federal taxes. Accurately completing your W-4 can ensure you don't have a big balance due at tax time.

federal insurance contributions act

Fica taxes are called payroll taxes because they are based on the amounts paid to employees. Fica taxes have two elements. withheld from employee paychecks and paid by employees and employers for Social Security (OASDI) and and Medicare.

20%

what % of net pay should you strive to save for PYF each month

1.45%

what is the federal tax rate for Medicare

6.2%

what is the federal tax rate for social security

5.75% of gross earning

what is the state tax income % for virginia