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WHAT DOES THAT MEAN?
TERM DEFINITION adjusted gross income the sum of everything a person earns in a year, minus deductions for taxes and benefits. allowance employee-claimed exemptions which tell an employer how much income tax to withhold from the employee’s paycheck to pay over to the IRS; also called “withholding allowance”.
exemption
a monetary exemption that reduces the amount of income tax due. the sum of everything a person earns in a year before any deductions are taken. “IRS”; The U.S. government agency responsible for collecting income taxes and enforcing the federal tax laws. Old age, survivor and disability insurance; aka Social Security; payroll code for the Social Security tax. notice to an employee of the direct deposit of their paycheck; can be attached to a paycheck and includes details of compensation, tax withholding and deductions. an amount that must be paid monthly, quarterly or yearly for healthcare, life or other insurance. an IRS requirement that an employer deduct income taxes from an employee’s pay and pay it over to the government. IRS form an employee receives from their employer showing the amount of the employee’s total earnings and withholdings for the year. IRS form an employee gives to their employer telling the employer how much money to withhold from the employee’s paycheck for federal income taxes. IRS form that individuals use to complete and file their annual income tax return. IRS form an employer uses to report a freelancer’s annual earnings to the IRS at the end of the year. the federal healthcare entitlement program for people aged 65 or older.
gross income
Internal Revenue Service
Medicare
OASDI
PRODUCT PREVIEW
paycheck stub
premium
withholding
W-2
W-4
1040 1099
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I. Deductions for Taxes Let’s start this lesson with a disclaimer and some advice: Taxes, deductions, and withholdings are governed by many laws, including the U.S. Federal Tax Code. These laws and codes are very complex with exceptions to and multiple interpretations of nearly every rule. We are covering only basic concepts. When you’re finally earning a paycheck, consult with an expert such as an accountant or qualified financial planner on a regular basis to be sure you are making informed financial decisions to maximize your employee benefits and minimize the amount of taxes you pay on your earnings.
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Chapter 5 | Honey, They Shrunk My Paycheck
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