19 Common Payroll Terms To Know

Disposable earnings refer to any wages that are left over after all government taxes and defined deductions have been taken out of the paycheck. This amount is then used to determine the level of pay subject to garnishment or child support withholding. The amount an employer is required by cash flow vs free cash flow law to take out of an employee’s wages for a specific payroll tax.

To encourage your workers to take the overnight shift, you might offer any takers an additional $5 per hour. Paid time off encompasses all the time an employee is not working while being compensated. In most circumstances, resident aliens can only be employed by organizations or companies that have sponsored their admission into the United States. Upon the resident alien’s admission, the sponsor is required to sign an affidavit agreeing to support the admitted individual.

Payroll Terms and Acronyms Glossary

1. Most pay stubs also give employees an update on how many vacation and sick days they’ve accrued and used during the year.
2. An organization that shares a worker’s employment with another organization.
3. Allows an employer to cover the taxes owed on a bonus or fringe benefit paid to an employee.

Depending on the state, SDI coverage may be funded by the employee, the employer, or both. Payment made to an employee to cover time away from work due to falling ill. Refers to when an employer pays employees twice per month, such as on the 15th and last day of the month. negative equity overview implications example The Social Security and Medicare taxes a self-employed person is legally required to pay.

With EFTPS, employers and taxpayers can pay their taxes by phone or online free of charge. This program has greatly reduced costs for employers while making it easier for individual taxpayers to get their taxes in on time. Garnishment is a legal proceeding authorizing an involuntary transfer of an employee’s wages to a creditor to satisfy a debt. Child support is a garnishment that is often placed when couples divorce and one does not pay as agreed in a divorce decree.

Exempt Wages

Compensation is an overarching term that encompasses royalty disbursement or suspense account definition all the types of payments an employee earns. For example, say you hire Julie and say you’ll pay her a $50,000 salary. Updated regularly with industry-specific vocabulary and concepts, the Glossary provides easy-to-understand definitions of tax-related terms. The acronym SSA can refer to either the Social Security Act or the Social Security Administration.

Variable pay refers to any program that awards individual employees or entire teams based on performance, which is further defined by variables outlined by an employer. Pay stub is a document accompanying each paycheck that details gross pay and deductions. And we’ve created a payroll glossary to help you kick-start this effort! From common terms and lingo to federal laws impacting payroll, give employees this resource to help them better grasp the process affecting them most. When an employee’s gross pay is deducted and sent to a creditor to pay off that employee’s debt. Additional income or compensation employees receive in addition to their normal wages.

State Disability Insurance (SDI)

A term used in the Affordable Care Act for employers with 50+ full-time or full-time equivalent employees. The total income and benefits employees have earned but not yet received. When an employee does not collect their paychecks after a period of time, the employer must follow the state’s escheat laws, which governs unclaimed property. In large food and beverage establishments, if all reported tips are less than 8% of the total gross sales, the employer must allocate the difference.

Most often, deductions are made for items such as health benefits and union dues. Taxable wage base is the maximum amount of employee compensation subject to Social Security, FUTA, and state unemployment insurance taxes. Take-home pay is the employee’s wages that remain after all normal deductions and taxes are taken out.