14 terms

Lesson 5: Honey, They Shrunk My Paycheck

STUDY
PLAY

Terms in this set (...)

adjusted gross income
the sum of everything an individual 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.
gross income
the sum of everything an individual earns in a year before any deductions are taken.
Internal Revenue Service
"IRS"; The U.S. government agency responsible for collecting income taxes and enforcing the federal tax laws.
Medicare
the federal healthcare entitlement program for people aged 65 or older.
OASDI
Old age, survivor and disability insurance; aka Social Security; how the Social Security tax deduction is designated on a paystub.
paystub
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.
premium
an amount that must be paid monthly, quarterly or yearly for health, life or other insurance.
withholding
an IRS requirement that an employer deduct income taxes from an employee's pay and pay it over to the government.
W-2
IRS form an employee receives from their employer showing the amount of the employee's total earnings and withholdings for the year.
W-4
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.
1040
IRS form that individuals use to complete and file their annual income tax return.
1099
IRS form an employer uses to report a freelancer's annual earnings to the IRS at the end of the year.