Glossary of Payroll Terms

Fair Labor Standards Act (FLSA) of 1938

FLSA. A federal regulation governing several time and labor issues. FLSA Overtime requires that all nonexempt employees be paid at a rate of time-and-one-half for all hours over 40 physically worked during a workweek. This requirement may be superseded by state or local laws when the lesser law is to the greater benefit of the employee, or by union contract. An FSLA Workweek is a permanently-established, regular workweek for a group of employees. The law also contains a number of other provisions such as the minimum wage and child labor.

Family Medical Leave Act (FMLA) of 1993

FMLA. A federal regulation that protects health benefits and job restoration for employees who must take a leave from work to care for themselves or family members. FMLA regulations contain provisions regarding employer coverage, employee eligibility and entitlement, notice and certification, continuation of health benefits, and job restoration.

Federal ID number

Also called an Employer Identification Number (EIN). This is a nine-digit number issued by the IRS. The digits are arranged as follows: 00-0000000. It is used to identify the tax accounts of the employers.

Federal Tax Deposit

In general, each quarter you must deposit income tax withheld and both the employer and employee Social Security and Medicare taxes (minus any Advanced EIC Payments. This is normally associated with Form 941 and Form 8109.


Federal Insurance Contributions Act. FICA also refers to the combined taxes of Social Security, disability, and Medicare hospital insurance. It is the amount withheld from an employee's paycheck which goes towards providing social security benefits. The amount withheld from each employee's paycheck is matched by a contribution from the employer. Both employee and employer contributions are deposited at regular intervals with a federal agency or designated bank.


Federal Income Tax. FIT is the amount withheld from an employee's pay check which goes toward their Federal Income Tax liability at the end of the year.


Federal income tax withholding. Federal income tax that is withheld from wages at the time of payment. Also refers to wages and benefits that are subject to federal income tax withholding.

Flat Tax Withholding

A flat 27% federal income tax withholding rate for supplemental wages. See also "Supplemental Wages."

Form 940

Employer's Annual Federal Unemployment Tax Return.

Form 942

Quarterly Tax Return for Household Employees.

Form 941

Employer's Quarterly FICA and Federal Income Tax Return.

Form 1042-S

A 1042-S Form is a year-end tax document given to a Non-Resident Alien who received wages protected by a tax treaty, or received a Qualified or Non-Qualified Scholarship.

Form 1099

Refers to a set of forms that are used to show different types of income other than wages paid by companies to employees and contractors. These include: 1099-A, -B, -DIV, -G, -INT, -MISC, -OID, -PATR,-R, and -S.

Form 8109

Federal Tax Deposit Coupon - This is a special form provided by the Federal Government that accompanies your deposit check.

Form 8109

Federal Tax Deposit Coupon - This is a special form provided by the Federal Government that accompanies your deposit check.

Form 8233

"Exemption from Withholding on Compensation for Independent Personal Services of a Non-Resident Alien Individual" is an IRS-issued form that must be filed by any NRA claiming exemption from Federal income tax withholding based on a tax treaty.

Form W-2

Wages and Tax Statement: employers must file a form W-2 to report the total amount of wages paid and taxes withheld for each employee in a calendar year.

Form W-3

Document showing the number or employees and total amounts for accompanying W-2 forms sent to the government.

Form W-4

Employee's Withholding Allowance Certificate; the W-4 tells the employer how many withholding allowance the employee is claiming along with the employee's marital status; it also tells the employer if the employee claims exemption from withholding.

Form W-5

Earned Income Credit Advance Payment Certificate; must be filed by employees who want to take advantage of advanced EIC payments and who attest to their eligibility for the advance payment.


Federal Unemployment Tax Act. An amount which must be paid into a federal government unemployment fund by an employer for each employee. The payment is taken as a certain percentage of an employee's earnings, up to a certain ceiling.

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