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Glossary

ERG GLOSSARY

What is . . . . .

940 Report – filed annually to report FUTA/FUI

941 Report – filed quarterly to report federal withholding, social security, Medicare taxes

1099 form – an IRS form to report independent contractor payments to the IRS. 

401(k) Retirement Plan – an employer sponsored qualified retirement savings plan. It allows an employee to save for their retirement while deferring any immediate income taxes on the money you contribute until withdrawn. 

W-2 – an IRS form used by employers to report wages paid to an employee to the IRS. 
W-2C – an IRS form used to correct an already filed form W-2. 

W-4 – an IRS form required by the IRS for an employee to provide legal name, social security #, address, filing and dependent status to their employer. 

W-5 – an IRS form for earned income credit (EIC).

W-9 – an IRS form required by the IRS for an independent contractor to provide their tax filing name, address and ID # to the entity that is contracting them. 

W-11 – Department of the Treasury Internal Revenue Service Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit.

ACH (Automated Clearing House) – The ACH network enables inter bank transactions to be made electronically (such as Direct Deposit). 

After Tax – a term used to describe a payroll deduction that is taken from an employee’s salary after the taxes have been calculated on the gross salary. 

ARRA – American Recovery and Reinvestment Act of 2009 enacted to create jobs and investment spending. (W-11 form is used to attest that employee has been out of work and justifies the employer asking for a credit.)

Background Check – an investigation into a potential employee’s criminal background. Also an inquiry into a potential employee’s vocational and/or educational past to verify that information given is accurate. 

COBRA – The Consolidated Omnibus Budget Reconciliation Act of 1986 benefits workers who lose their health benefits. Gives them and their families the right to choose to continue group health benefits for a limited time under certain circumstances such as voluntary or involuntary job loss, reduction in hours worked, transition between jobs, death, divorce and other life events. 

Direct Deposit – a deposit in which funds (paychecks in particular) are directly deposited into the employee’s individual bank account from the employer’s bank account. 

Disability Insurance – designed to replace a percentage of an employee’s gross income on a tax-free basis should a sickness or illness prevent them from earning an income in their occupation. Strictly voluntary, each disability insurance policy from each insurance company is very different. 

EIN – Employer Identification Number used as IRS federal tax ID number. 

EFTPS – Electronic Federal Tax Payment System is a system offered by the US Department of Treasury to allow taxpayers to pay federal taxes electronically and free of charge. 

FICA – acronym for the Federal Insurance Contributions Act – the name of the legislation that requires employers to withhold 7.65% taxes from your paycheck to cover certain government programs. The employer also pays 7.65%.

FMLA - Family Medical Leave Act of 1993 – provides eligible employees up to 12 work weeks of paid or unpaid job-protected leave during any 12 month period for a qualified event. 

FSA – Flexible Spending Accounts enable employees to set aside pre-tax dollars to use to cover their medical expenses not covered by their health insurance plan, orthodontia, and childcare. It is a type of Section 125 Cafeteria Plan. 

FUTA – Federal Unemployment Tax – also referred to as FUI, Federal Unemployment Insurance. 

HIPAA – The Health Insurance Portability and Accountability Act (HIPAA) of 1996 amended the Employee Retirement Income Security Act of 1974 (ERISA) to provide new rights and protections for participants and beneficiaries in group health plans. 

Minimum Wage – minimum wage is administered by the Department of Labor through the Fair Labor Standards Act (FLSA) that allows employees a minimum wage to be earned. 

New Hire Reporting – a requirement of all states used mainly by child support agencies to track employees for wage garnishment purposes. 

Payroll Register – an accounting document that provides a summary of the payroll information for a pay period. It lists all employees who were paid during the pay period along with their various deductions and net pay. 

Pre Tax – a term used to describe a payroll deduction that is taken from an employee’s salary before the taxes have been calculated. The taxes are then calculated on the remaining salary rather than the original gross salary. 

Section 125 Cafeteria Plan – allows an employer to deduct employee contributions for certain benefits on a pre tax basis, such as health, dental and vision premiums. This reduces the amount of federal, state and local taxes the employee owes. 

SUTA – State Unemployment Tax Authority governs a required tax paid by employers and employees in some states. In Oklahoma all SUTA is paid by the employer and OESC (Oklahoma Employment Security Commission) is the governing authority. 

Workers’ Compensation Insurance – insurance to cover an employer from liability for on the job injuries sustained by an employee. It is required in Oklahoma.