1
Why should you complete a W-4 form?
Your W-4 informs employers how much to withhold from and employees' paycheck to pay their federal income tax liability.
What is SUTA? Where can you check the SUTA rate for each state?
State Unemployment Tax Act, is the state unemployment insurance program to benefit workers who lost their jobs
Tax Vertex Guide (where is it located)
What is a Health Savings Account (HSA)
Tax‐exempt trusts or custodial accounts are created exclusively to pay for qualified medical expenses of the account holder (for example, an employee) and his or her spouse and dependents.
What does Pay Period mean?
A pay period is a period of service for which the employer pays wages to employees. This duration of time can be daily, weekly, bi‐weekly, semi‐monthly, monthly, or annually.
What is Taxable Income?
Taxable income refers to any income that is subject to tax.
What is a 1099 and when is it used?
Form received from a business showing your income when they hire you as an independent contractor.
What is Federal Income Tax
An IRS tax on annual tax earnings of individuals, corporations, and other legal entities.
What does Gross Earnings Mean?
Gross earnings refer to the total earnings prior to any deductions.
When should an employee receive a W-2 from their employer?
It should be postmarked by January 31st.
What are dependents and how do they affect your paycheck?
The number of dependents (spouse or child) that you want to claim. The higher number of dependents you have will lower the amount of taxes that your employer withholds.
What is Reciprocity?
Reciprocity refers to the relationship between two taxing jurisdictions whereby privileges granted by one are returned by the other as a courtesy under the terms of a reciprocal agreement.
If you claim a large number of allowances on your W-4 form, your taxes withheld will...
decrease, and your take-home pay will increase
Who is legally required to file a tax return?
Anyone who makes more than the minimum tax amount.
What is SDI (State Disability Insurance)
SDI is an acronym for State Disability Insurance. Some states have a separate provision for financial support to those who can no longer work due to a disability. These states collect a contribution from employers and/or employees to fund this provision.
Withholding Tax refers to the amount of income taxes that an employer withholds from an employee's earnings in his or her paycheck. The amount withheld is credited against the amount of income taxes the employee must pay on earned income for the taxable year.
What information will you find on a W-2 in boxes 1-6?
Employee earnings and federal taxes
What taxes are the employee and employer responsible for paying?
Employer - FUTA, SUTA/SUI, FICA(Social Security & Medicare), If applicable local Employer taxes.
Employee - Federal Income Tax, State Income tax FICA(Social Security & Medicare), If applicable local Employee taxes.
What does Net Pay Mean?
Net Pay refers to the total earnings of an employee after all deductions have been taken.
Net pay is also referred to as take‐home Pay.
What state has school district taxes withheld?
KY, OH, PA
How do you calculate Net Pay?
Gross Pay - deductions
What is FICA?
Federal Insurance Contribution Act (Includes both Social Security and Medicare taxes)
What is a local tax? What are some states that have local taxes?
A local tax is an assessment by a state, county, or municipality to fund public services.
Examples of states that have local taxes
AL,CO,DE,KY,MD,MI,MO,NY, OH,OR, PA
What are Pre-Tax Deductions
A pre‐tax deduction refers to any deductions not subject to tax. These amounts are deducted from the gross earnings prior to calculating any taxes. Examples of pre‐tax deductions include 125 Cafeteria, 401K, 403B, and 457 plans.
What form do you use to file a tax return with the IRS?
1040
What is a state that has a SUTA minor tax?
CA, DE, GA, HI, ID, MN, MS, MT, TX,
CA Employment Training Tax/DE Employment Training Tax/GA Administrative Assessment Tax/HI Employment and Training Assessment/ID Workforce Development/MN Workforce Development Fee & Federal loan Interest/MS Workforce Investment & training Tax/MT Administrative Fund Tax/TX Employment & Training Investment Tax