Glossary of Payroll Terms
There are several terms and acronyms used when it comes to your paycheck. Below is a glossary of commonly used payroll terms and their meanings.
An annuity or mutual fund that provides retirement income for employees of public schools and certain tax-exempt organizations; similar to a 401(k) plan.
A deferred compensation plan available for employees of certain state and local governments and certain non-governmental tax-exempt organizations.
Employer Identification Number (EIN)
Nine-digit number issued by IRS; required for entities reporting employment taxes or giving tax statements to employees or annuitants.
Based on the Fair Labor Standards Act (FLSA), an employee who is exempt from overtime provisions and, therefore, paid a salary per pay period (flat rate of pay).
Federal Insurance Contributions Act (FICA)
Federal program providing retirement and other benefits; funded by employer/employee contributions during working years.
Federal Income Tax (FIT)
Personal income tax with progressive rates; liability amount calculated on Form 1040.
Fair Labor Standards Act (FLSA)
Defines Federal rules for minimum wage, overtime and other aspects of compensation for covered employees; usually overrides conflicting state rules.
Flexible Spending Account (FSA)
A Health Care FSA enables employees to pay for eligible out-of-pocket medical, dental, and vision care expenses on a pre-tax basis. A Dependent Care FSA enables employees to pay for dependent day care expenses, which must be for the purpose of allowing the employee and, if married, the employee’s spouse, to be employed. FSAs are funded by employees via pre-tax payroll deductions. There are annual limits on the amount that can be contributed to Health Care and Dependent Care FSAs and accounts assets can only be used for qualified expenses incurred during the calendar year. Per IRS regulations, unused FSA balances are forfeited.
Federal Unemployment Tax Act (FUTA)
Employer-paid contribution (effectively 0.8 percent of the first $7,000 of each employee’s wages) paid to IRS to supplement state unemployment compensation systems.
Health Spending Account (HSA)
An HSA enables employees who are enrolled in high deductible health plans to pay for eligible out-of-pocket medical, dental, and vision care expenses on a pre-tax basis. The HSA is funded by employees via pre-tax payroll deductions. There are annual limits on the amount that can be contributed to an HSA but, unlike an FSA, unused funds are not forfeited. Funds roll over and accumulate from year to year.
See "Non-Exempt Employee"
Individual Retirement Account (IRA)
A personal retirement savings account, that satisfies the Internal Revenue Code Section 408; contributions and account earnings are not subject to income tax until distribution.
Based on the Fair Labor Standards Act (FLSA), an employee who is non-exempt from overtime provisions and, therefore, paid an hourly rate of pay times the number of hours worked. All hours worked in excess of 40 per workweek are paid “overtime” at one and one-half (1 ½) times her/his regular rate of pay.
Payroll Authorization Form (PAF)
A document that provides the essential information and approvals pertaining to an employee’s job, such as the rate of pay, hire/rehire date, termination date (if appropriate), etc. The PAF is required to establish an employee's SMU job record.
See "Exempt Employee"
Social Security Administration (SSA)
Federal agency that administers the Social Security and Medicare programs.
Social Security Number (SSN)
The unique 9-digit number assigned by SSA to workers and other taxpayers; used to record contributions toward employee’s retirement and other benefits.
State Unemployment Insurance (SUI)
State-provided emergency income benefits for qualified workers who have lost jobs but are able and available to work.
Taxpayer Identification Number (TIN)
For individuals, this is usually the Social Security Number (SSN); for business entities, this is the Employer Identification Number (EIN). A foreign individual who is not authorized to work in the U.S. may be issued an Individual Taxpayer Identification Number (ITIN) - for other non-employment tax reporting purposes.
SMU's timekeeping module within my.SMU.edu. Includes employee timesheets, as well as approval pages for time reported.
U.S. Citizenship and Immigration Services (USCIS)
Federal agency regulating work privileges of foreign nationals in the U.S.; controls worker status by type of visa issued.
[Form] W-2: Wage and Tax Statement
A statement of an employee’s annual wages and taxes provided by an employer; used by the employee on his federal, state, and/or local income tax returns.
[Form] W-4: Employee's Withholding Exemption Certificate
An Internal Revenue form used to indicate the number of personal exemptions an employee claims for the purpose of calculating federal income tax withholding. Some state income tax withholding is also based on the employee's Form W-4.
Functionality within TIMEaccess whereby non-exempt employees can record punch times via their computers (rather than using SMU's time clocks).
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