| Fair Labor Standards Act |
law which regulates such areas as minimum wage, overtime pay, and child labor for employers and employees covered by the law |
| fair market value (FMV) |
used to determine the value of noncash, employer-provided benefits for payroll tax purposes, or the value of facilitiesprovided to employees in lieu of wages |
| Family and Medical Leave Act (FMLA) |
law guaranteeing 12 weeks' unpaid leave to most employees to care for newborn or newly adopted children, or to deal with a serious illness or injury suffered by the employee or an ailing shile, spouse, or parent of the employee |
| federal income tax withholding (FITW) |
FIT withheld from employees' wages when they are paid
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| Federal Insurance Contribution Act |
describes the combined taxes levied for social security and Medicare
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| Federal Unemployment Tax Act (FUTA) |
requires employers to pay a certain percentage of their employees' wages (up to a maximum wage limit) as a payroll tax to help fund unemployment compensation benefits for separated employees |
| filing status |
marital status of an employee for withholding purposes |
| flat rate method |
method of withholding federal income tax on supplemental wages in which the supplemental payment and regular wages are treated separately; the employer withholds 27% of the supplemental wages |
| Form 940 |
Employer's Annual Federal Unemployment Tax Return |
| Form 941 |
Employer's Quarterly Federal Tax Return. Provides the IRS with a report of each employer's total taxable wages paid and payroll tax liability |
| For 941c |
Statement to Correct Information. a form used to make adjustments to Form 941 when taxes have been underwithheld or overwithheld; explains the nature of the adjustment and shows the erroneous and corrected amounts of tax withheld |
| Form 1099-MISC |
states how much a contractor was paid for services rendered during the past calendar year |
| Form 8109 |
Federal Tax Deposit Coupon. Coupon that accompanies paper tax deposits indicating what type of tax is being deposited, the quarter which the liability was incurred, and the amount of the deposit |
| Form W-2 |
Wage and Tax Statement. Employers must file a Form W-2 to report the total amount of wages paid and taxes withheld for each employee in a calendar year |
| Form W-2c |
Statement of Corrected Income and Tax Amounts. Form that must be completed by an employer if an incorrect copy of a W-2 has been sent to the SSA |
| Form W-3 |
Transmittal of Income and Tax Statements. Form which an employer must also file when filing paper Forms W-2 (Copy A) with the SSA; contains totals of the amounts reported on the employer's W-2 forms, acting as a "reconciliation" of these forms |
| Form W-3c |
Transmittal of Corrected Income and Tax Statements. Form that accompanies Form W-2c in most situations when it is sent to the SSA that totals the information from all the W-2c forms being submitted |
| Form W-4 |
Employee's Withholding Allowance Certificate. The W-4 tells the employer how many withholding allowances the employee is claiming along with the employee's marital status; it also tells the employer if the employee claims exemption from withholding |
| Form W-4P |
Withholding Certificate for Pension or Annuity Payments. Allows retired employees to have input into the amount of federal income tax withheld from a pension or annuity |
| Form W-4S |
Request for Federal Income Tax Withholding From Sick Pay. Filed when an employee receives sick pay from a third party insurer due to a disabling non-job-related illness or injury; the employee uses the form to tell the third party how much to withhold from his or her pay |
| Form W-5 |
Earned Income Credit Advance Payment Certificate. Must be filed by employees who want to take advantage of advance EIC payments and which attests to their eligibility for the advance payments |
| FUTA |
requires employers to pay a certain percentage of their employees' wages (up to a maximum wage limit) as a payroll tax to help fund unemployment compensation benefits for separated employees |
| garnishment |
a legal proceeding authorizing an involuntery transfer of an employee's wages to a creditor to satisfy a debt |
| general ledger |
ledger containing all of the transactions in the debit and credit accounts of a business |
| golden parachute payment |
payment made to business executives in excess of their usual compensation (e.g., stock options, bonuses) in the event the business is sold and the executives are terminated from employment |
| gross income |
the compensation for services, including fees, commissions, fringe benefits, and similar items |
| gross pay |
the total amount received from the employer before any deductions are made |
| group-term life insurance (GTLI) |
term life insurance that is provided to employees, with the cost being borne by the employer, the employee, or both |
| highly compensated employee (HCE) |
in the context of certain fringe benefit plans, an employee who is an owner or officer of a business or whose salary exceeds a certain amount (indexed each year for inflation). Many benefits offered by employers do not qualify for favorable tax treatment if they discriminate in favor of highly compensated employees. And employers may also be restricted in their use of safe-harbor valuations of benefits provided to such employees |
| Immigration Reform and Control Act of 1986 (IRCA) |
Law enacted in 1986 that prohibits employers from hiring persons who are not authorized to work in the U.S. and from discriminating against those who are based on their national origin or citizenship |
| income statement |
financial statement showing a company's results of operations for an accounting period or fiscal year |
| independent contractor |
a non-employee contracted by a business to perform services; although the business specifies the result of the work to be performed, it has no right to control the details of when, how, or who will ultimately perform the work |
| information return |
a return sent to the IRS (e.g., 1099 series) or the SSA (e.g., Form W-2, Copy A along with Form W-3 or 6559) that indicates information relevant to tax liability |
| interface |
the place where two systems meet |
| Internal Revenue Code (IRC) |
federal tax laws; generally referred to as the Internal Revenue Code of 1986, which was the year of the latest major overhaul of the Code; the IRC also comprises Title 26 of the United States Code |
| involuntary deductions |
deductions over which the employers and employees have no control |
| leased employees |
employees of a leasing agency who are hired and trained for the client firm through the agency. Withholding, depositing, and reporting responsibilities remain with the leasing agency |
| liability |
debt of a business that has yet to be paid |
| long-term care insurance |
an insurance contract providing for coverage of qualified long-term care services, including diagnostic, preventive, treating, mitigating and rehabilitative services, which is treated as an accident and health insurance contract for payroll tax purposes |
| lookback period |
the 12-month period running from July 1 of the second preceeding calendar year through June 30 of the preceeding calendar year; the employer's payroll tax liability during this period determines its depositor status for the current year |
| Medicare |
federal hospital insurance program for individuals age 65 or older and some disabled persons; it is funded through the hospital insurance component of FICA tax |
| minimum wage |
lowest amount that an employer can pay its employees per hour under federal or state law; the federal minimum wage is $5.15 per hour |
| monthly |
once per month; type of payroll period |
| net pay |
that part of an employee's wages that remains after all deductions have been subtracted (e.g., taxes, health insurance premiums, union dues, etc.) |
| net worth |
amount by which a company's assets exceed liabilities |
| noncash fringe benefits |
benefits provided to employees in some form other than cash (e.g., company car, health and life insurance, parking facility, etc.), which may be taxable or nontaxable |
| nondiscretionary bonus |
contractual or agreed-upon bonus or incentive related to production, efficiency, attendance, quality, or some other measure of performance |
| nonexempt employees |
employees who are covered by the minimum wage and overtime provisions of the Fair Labor Standards Act; they may be paid on an hourly or salary basis |
| nonqualified plan |
in the context of employee benefiots, an employer plan that does not meet IRS qualification requirements |