Appendix 4.

01G

Key Terms: Work Compensation and Forms

Term wage salary commission tip bonus Forms of Payment paycheck direct deposit payroll card A form of payment to an employee An employer deposits the employees paycheck dirctly into the authorized employees depository institution account. A prepaid card that is offered to employees as an alternative to paper paychecks or directly depositing wages into an employees depostiory institution Explanation The amount of money paid for a specified quantity of labor. A set amount of money paid for a set period of time worked. Income paid as a percentage of sales made by a salesman Money paid by customers to those who provide services. Money paid in addition to base pay, either as a reward for performance or as a share of profit. Types of Compensation for Work

Contents of Paycheck Stub paycheck stub pay period gross pay net pay deduction federal withholding tax state withholding tax This part lists the paycheck deductions as well as other important information. The length of time for which an employees wages are calculated. The total amount of money earned during the pay period before deductions. The amount of money left after all the deductions have been taken from the gross pay earned in the pay period. Money subtracted from gross pay for required taxes, employee insurance, and retirement benefits. The amount required by law for employers to withhold from earned wages to pay federal income taxes. The percentage deducted from an individuals paycheck to assist in funding government agencies within the state.

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Appendix 4.01G, continued

Key Terms: Work Compensation and Forms

Contents of Paycheck Stub, continued FICA Federal Insurance Contributions Act. This tax includes Social Security and Medicare. Social Security taxes are based on a 6.2 percentage of the employees gross income. Medicare is 1.45% of gross income. The amount an employee contributed each pay period to a retirement plan. The amount taken from the employees paycheck for medical benefits. The total of all deductions which have been withheld from an individuals paycheck from January 1 to the last day of the pay period A compulsory charge imposed on citizens by local, state, or federal governments. The higher the income, the higher the amount of taxes paid They impose a higher tax rate on those with lower incomes than those with higher States the amount of money earned and taxes paid throughout the previous year An employees withholding certificate---the information provided on this form determines the percentage of gross pay to be withheld for taxes Employment Eligibility Verification Form---the information on this form is for employers to verify the eligibility of individuals for employment. Tax forms that report other sources of income earned during a tax year. x x x 1099-INT- Interest income earned on savings and/or investment accounts during the previous year. 1099-DIV- Dividends earned on investments during the previous year. 1099-MISC- Income earned from self-employment, royalties, rent payments, unemployment compensation, and other sources.

retirement plan medical year-to-date deductions tax progressive tax regressive tax Form W-2 Form W-4 Form I-9 1099 Forms

Forms and Resources for Managing Income Taxes

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