Question

Payroll Project #1

Define the following terms, in most instances a paragraph or so will be required to fully define:

Federal Withholding Taxes

Federal Insurance Contributions Act

Employment Security Taxes

Wages

Overtime Premium

What is an IRA?

What is Net Pay?

Who is responsible for paying FICA Taxes?

Who is responsible for sending FICA taxes to the Federal Government?

Answer 1

1-Federal Withholding taxes-First of all withholding means it is part of employee wages which are not paid in his salary or paycheck so Federal holding taxes means it is the portion of employee wages which are directly paid to federal gov,state,or local authority.so withholding reduces the burden of employee when they paid their annual tax return.

2-Federal Insurance Contributions Act- It is payroll tax of United States which contributes in social welfare and medicare programes.It basically provide benefits to disabled,retires person and children.It i deducted from employee paycheck and no exemption is provided on deduction in annual tax return.

3-Employment Security Taxes-It is basically responsible is for providing assistance and information to employers concerning the Unemployment Insurance contributions program and for the collection of UI contributions.

4-Wages-It i the money paid by employerr to employee for their contribution in work or services.It can be paid hourly/weekly or monthly basis.so basically it is basicalyy employee compensation paid for their contribution.

5-Overtime Premium-There is fixed timing to the employee for the work.If an employee worked more than his fixed timing so the additional amount is paid to employee.so the overtime amount received by employee is called overtime premium.It can be basically 50% of the base pay.

6- IRA-It allows you to save money for retirement in a tax-advantaged way. It is an account set up at a financial institution that allows an individual to save for retirement with tax-free growth or on a tax-deferred basis.It is tax advantaged investing tool that individuals use to earmark funds for retirement savings.

7- Net Pay-It is basically the amount receievd by employee after deduction and contribution from gross pay total. it is the emolyee take home money.

8- Responsiblity for paying FICA Taxes-There is employer responisbilty for paying FICA Taxes.

9- It is an Employer duty to periodically sends both the employer and employee portions of FICA to the IRS using the Electronic Federal Tax Payments System