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