12-2 Flashcards
payroll taxes
Taxes based on the payroll of a business
payroll deduction
Any amount withheld from an employee’s gross earnings
withholding allowance
A deduction from total earnings for each person legally supported by a taxpayer, including the employee.
social security tax
A federal tax paid for old-age, survivors, and disability insurance.
Medicare tax
A federal tax paid for hospital insurance.
accumulated earnings
The total gross earnings year to date for an employee.
tax base
The maximum amount of earnings on which a tax is calculated.
qualified retirement plan
A retirement savings plan approved by the Internal Revenue Service that provides individuals with a tax benefit.
401(k)
A qualified retirement plan sponsored by an employer.
individual retirement account (IRA)
A qualified retirement plan that provides most individuals with a deferred federal income tax benefit.
Roth individual retirement account (Roth IRA)
A qualified retirement plan that allows tax-free withdrawals from the account.