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Glossary
Confused about a specific term or acronym? Solve the mysteries of terminology with this informative resource. Updated regularly with industry-specific vocabulary and concepts, the Glossary provides easy-to-understand definitions of tax-related terms.
Crystal Clear Communication.
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- 3PSP
See Third Party Sick Pay
- 401(k), 403-B, 408(k), 501-C
A cash or deferred arrangement that allows employees to authorize their employer to place pretax dollars in a retirement plan that invests the money. The contributions (including those matched by the employer) and any earnings on them are not subject to federal income tax (and most state income taxes) until they are withdrawn.
- EIC
See Earned Income Credit.
- ELECTRONIC FEDERAL TAX PAYMENT SYSTEM
Electronic Federal Tax Payment System (EFTPS) An electronic system for reporting
and paying federal taxes. Typically refers to an Internal Revenue Service (IRS)
regulation requiring that taxpayers within a specific threshold for federal
employment tax deposits make all of their business tax payments electronically.
For more information visit this www.eftps.gov
- Emerging Business Services ®
A division of ADP serving employers with less than 100 employees.
- Employee Leasing Company (PEO)
A company that leases employees, to another business, on a contract basis. They handle all personnel matters and are generally considered the employer of the leased employees.
- Employer Services
The business unit of ADP engaged in providing clients with employer-related services, including human resource management and payroll processing.
- Employer Tax Identification Number (EIN)
A 9-digit state identification number, e.g., 12-3456789, assigned to each employer by the Internal Revenue Service (IRS). This number must be used on all documentation submitted to the agency. In some states, the EIN is the same as the Federal Employer Identification Number (FEIN).
- Exempt from Withholding
An employee who claims free from withholding from Federal, state or local taxes. A person must meet certain income, tax liability, and dependency criteria. This does not exempt a person from other kinds of tax withholding, such as the Social Security tax.
- Experience Rate
The state unemployment insurance tax rate that is based on the amount of unemployment benefits paid out as a percent of total wages. The experience rate has been calculated to ensure that an employer has sufficient funds to cover future unemployment disbursements.
- Experience Rating
The calculation of an employer SUI tax rate, based on its ability to maintain a stable work force through a positive payroll history and minimizing benefit charges against its account. SIC codes are often utilized as a factor in the determination of an employer experience rate. (Also see: SUI,SIC)
- Experience Tax Rate
A method for determining the contribution rates of individual employers according to the factors specified in the State unemployment compensation code for measuring an employer's experience with respect to unemployment. After an employer has met the state's merit rating requirements an experience rate is assigned. Depending on the State, an employers eligibility for experience rating is based on the number of years it has been chargeable for unemployment benefits and/or liable for unemployment taxes. Most states will wait to assign the experience rate until the beginning of the next rate year; however, a few will assign a new rate as soon as the employer is eligible. (Also see: Benefit Ratio Formula, Benefit Wage Formula, Reserve Ratio Formula)
- Federal Income Tax (FIT)
A withholding tax levied against employees. The amount of withholding varies with the amount of earnings, frequency of pay, number of claimed exemptions, and marital status.
- Federal Insurance Contribution Act (FICA)
FICA is a tax consisting of Social Security and Medicare taxes levied against employers and employees. Employers must match employee Social Security and Medicare tax contributions, using the same rate and taxable wage amounts.
- Federal Unemployment Tax Act (FUTA)
Federal law first enacted in 1939, which sets guidelines for the administration of unemployment compensation programs. All liable employers pay a federal tax to fund administration of State and Federal unemployment insurance programs. These monies are also used to fund extended benefits. States must adhere to the minimum FUTA guidelines in terms of taxation and benefit administration but may set higher standards.
- FICA
See Federal Insurance Contribution Act.
- Fiscal Year
Typically July 1 through June 30 generally, the federal government and some states use October 1 through September 30. (Also see: Calendar Year)
- Garnishment
Garnishment another term for lien. ADP also uses the term garnishment to describe one of the four lien types handled by WGPS. ADP processes regular garnishments (federal and state student loans) and creditor garnishments(for money owed to a hospital, department store, and other creditors)
- Gross Wages
Total remuneration paid an employee before taxes and deductions.
- Group Term Life (GTL)
Employer- provided life insurance coverage. The premium for coverage in excess of $50,000 is taxable and must be reported as additional income on an employee's Form W-2.
- GTL
See Group Term Life.
- HR Partner
A PC-based payroll system offered by ADP.
- IRA
See Individual Retirement Account.
- IRS
Internal Revenue Service.
- Jurisdiction
The legal authority which a court has over particular persons and certain types of cases in a defined geographical area.
- Leased Employment
See Employee Leasing
- Leave of Absence (LOA)
Official permission to be excused from work or duty.
- Other Compensation or Other Comp
Any additional earnings, other than wages, declared on an individual's annual tax document and reported on Form 1099. Some types of Other Comp can be included on an employee's W-2. Non-employees usually receive a 1099 rather than a W-2.
- Payroll Cycle
Refers to the length of time between payrolls. For example, if an employer processes payroll every week, each week is considered a new payroll cycle.
- Social Security/Medicare (SS/MED)
Referring to the requirement by the Federal Insurance Contribution Act that employers and employees to contribute to retirement, medical, and disability insurance. The combined (FICA) rate is withheld from employee wages up to a set taxable limit and matched by a required employer contribution.
- Sole Proprietorship
The singular owner of a business.
- SS/MED
See Social Security/Medicare.
- State Disability Insurance (SDI)
Referring to a state-established compensation plan for the support of employees unable to work due to an illness or injury. Some states require employee and employer (EE/ER) contributions to a disability insurance fund for payment of SDI benefits.
- State Income Tax (SIT)
A withholding tax deducted from an employee's wages as required by a state.The amount of withholding varies with the amount of earnings, frequency of pay, number of claimed exemptions, and marital status.
- Subject To
Typically referring to wages or compensation that are liable to taxation.
- Successor
The remaining entity, after a partial or total transfer of business.
- SUI
See State Unemployment Insurance.
- SUI Exempt
Some nonprofit employers are excluded from paying State Unemployment Insurance tax. Exempt employers are not required to file any quarterly returns or Employee Wage Detail Reports.
- Third Party Sick Pay (3PSP)
Third Party Sick Pay (3PSP) is a disability insurance benefit that provides employees with partial or full wage benefit payments while on long-term medical leave. The payments are made to employees through an insurance company, union plan, or a state temporary disability plan instead of through their employer.
- Total Tax
An ADP service that assists employers in responding to unemployment benefit claims and controlling agency-assigned SUI experience rates.
- Total Tax Plus
An ADP service that assists employers in responding to unemployment benefit claims and controlling agency-assigned SUI experience rates.
- Wage Garnishment Processing Service
An ADP value-added service that automatically prioritizes, calculates, and deducts employee wage garnishments and disburses them to the appropriate payee.
- Wage Withholding
An automatic deduction of all or part of an employee’s wages to pay some debt or financial obligation such as child support. Wage withholding can be voluntary or involuntary
- Cafeteria Plans
A plan that offers flexible benefits under the Internal Revenue Code Section 125. Employees choose their benefits from a "menu" of cash and qualified benefits,offered by an employer. some of which can be paid with pretax deductions from wages.
Benefits that may be offered under a cafeteria plan include accident and health insurance, dependent care assistance, group legal services, group term life insurance (although life insurance in excess of $50,000 is includible in gross income), and additional vacation days.
- Alien
An individual living in or visiting the United States who is not a citizen of the U.S. More information can be found in the Alien Immigration, Payments, and Taxation Guide.
- Compliance
Referring to compliance with any federal, state or local laws regarding taxes and dealings with employees
- COD
Court ordered deduction; any legal notice received ordering an employer to deduct monies from an employees paycheck to be paid directly to the court or another agency (child support payment, garnishments, etc.)
- Circular ‘E’
Federal employer’s tax guide. Changes each year and states current federal tax and deposit rules as well as rates.
- Consolidated Omnibus Budget Reconciliation Act of
A law requiring organizations with
20 or more employees to offer continuation of group health benefits to certain
former employees, retirees, spouses, and dependent children.
The length of continuation coverage offered depends on the "qualifying event."
(certain types of events that would cause, except for COBRA continuation coverage,
an individual to lose health coverage). The type of qualifying event will determine
who is entitled for continuation coverage and the required amount of time that
the plan must offer the health coverage under COBRA. For example, in the event
a covered employee voluntarily or involuntarily terminates employment for reason
other than "gross misconduct" or reduces the number of hours worked (with loss
of coverage), the covered employee, spouse, and dependent children will be entitled
to continue coverage in the group health plan for up to 18 months. A covered
spouse and dependent child(ren) are eligible to continue coverage for up to
36 months in the event of divorce, legal separation, or death of the covered
employee, or the child(ren) no longer meets the requirements of a dependent
child under the health plan.
- EEO
EEO - Equal Employment Opportunity
- I9
Immigration and Naturalization Employment Eligibility verification form
- OSHA
Occupational Safety Hazards Act. A federal watchdog of employee safety.
- Section 125
IRS section setting forth rules & regulations regarding pre-tax deductions for some insurance premiums, un-reimbursed medical expenses and child/dependent care.
- Workers Compensation
A state administered insurance covering worker’s job related injury and illness. Providing the employee with a percentage of their wages while unable to work.
- Deferred Compensation Plan
Deferred compensation plans are employee benefit plans, authorized by various Internal Revenue Code Sections, under which employees may contribute a percentage of wages to tax deferred savings plans rather than receive the amounts as current compensation. The most commonly used deferred compensation plan is the 401(k) plan (so named for its IRC section).<br>
Employee contributions to 401(k) plans are exempt from federal income tax and, in some states, state income tax, withholding but are not exempt from FICA withholding. Employer contributions, made on behalf of the employee, are also exempt from federal income tax withholding. Contributions and earnings thereon accumulate tax free until distributed to the employee at retirement.
The maximum amount that an employee can elect to defer for 2000 under a 401(k) plan in which the employee participates is $10,500. The limit is adjusted annually for inflation. The amount that an employee may actually defer, however, is usually lower as typical plan terms limit contributions to the lower of a specified percentage of current wages or the statutory maximum.
No special permission is required from the IRS to implement a 401(k) plan but the regulations surrounding these types of plans are so voluminous and complicated that a qualification ruling is usually sought.
Deferred compensation plans have strict requirements as to eligibility, participation, vesting, nondiscrimination, withdrawal of funds, and annual reporting and legal advice should be sought in their institution.
- ERISA
The main purpose of the Employee Retirement Income Security Act (ERISA) is to ensure that employees receive the pension and other benefits promised by their employers. ERISA also incorporates and is tied to provisions of the Internal Revenue Code (IRC) that were enacted to encourage employers to provide retirement benefits to their employees.
- EVS
Employee Verification Service (EVS). The service will match your record of employee names and Social Security numbers (SSN) with SSAs records before you prepare and submit Forms W-2 (Wage and Tax Statements). Making sure names and SSNs entered on the W-2 match the Social Security Administrations records is important because unmatched records can result in additional processing costs for you and uncredited earnings for your employees. Uncredited earnings can affect future eligibility to (and amounts paid under) SSAs retirement, disability and survivors program. EVS can help eliminate this common reporting error.
For more information click here.
- 403(b) Annuity
An annuity or mutual fund that provides retirement income for employees of public schools and certain tax exempt organizations.
- Advance Earned Income Credit (AEIC)
Payments of earned income credit during the year to employees who expect to be eligible for the credit. Employers make the payments out of federal income, Social Security and Medicate taxes withheld from the employees’ wages.
- Accrual
The recognition of assets, expenses, liabilities or revenues after the cash value has been determined, but before it is transferred.
- After-Tax Deduction
A deduction from an employee’s pay that does not reduce the employee’s taxable wages. It is taken out only after all applicable taxes and other deductions have been withheld (e.g., union dues, garnishments, charitable contributions).
- Child Support Withholding
The process of withholding amounts from an employee’s compensation to satisfy a child support order from a court or state child welfare administrative agency. The employer is responsible for withholding the amounts and paying them over to the party named in the withholding order.
- Compensatory Time
Paid time off granted to an employee for working extra hours. The Federal Wage-Hour Law places severe restrictions on the use of compensatory time to avoid paying overtime, although special exemptions are allowed for certain public sector employees (e.g., police officers and firefighters).
- Fair Labor Standards Act (FLSA)
The Fair Labor Standards Act (1938) regulates minimum wage, overtime pay, and child labor laws for employers and employees covered by the law.
- Fringe Benefit
Compensation other than wages provided to an employee such as health and life insurance, vacation, employer-provided vehicles, public transportation subsidies, etc., that may be taxable or non-taxable.
- Garnishee
In a payroll context, an employer that receives an order requiring withholding from an employee’s wages to satisfy a debt.
- Immigration Reform and Control Act of 1986 (IRCA)
Law enacted in 1986 that prohibits employers from hiring persons who are not authorized to work in the US and from discriminating against those who are because of national origin or citizenship.
- Immigration and Naturalization Service (INS)
Federal agency charged with enforcement of United States Immigration laws.
- Minimum Wage
The lowest hourly amount an employer can pay employees under federal or state law.
- Medicare
Used to provide medical benefits for certain individuals when they reach age 65. Workers, retired workers, and the spouses of workers and retired workers are eligible to receive Medicare benefits upon reaching age 65.It is funded through the hospital insurance component of FICA. Employer and employee pay matching amounts; no annual wage limit.
- Net Pay
That part of an employee’s wages that remains after all deductions have been subtracted (taxes, health insurance, benefits, etc.)
- Non-cash Fringe Benefits
Benefits provided to employees in some form other than cash (i.e., company care, health or life insurance, parking) which may be taxable or nontaxable.
- Nonqualified Plan
In the context of employee benefits, an employer plan that does not meet IRS qualification requirements.
- Nonresident Alien
An individual from a foreign country working in the US who does not pass either the "green card" or "substantial presence" residency test, but is subject to federal income tax on US source income.
- Shift Differential
Extra pay received by employees for working a less-than desirable shift (i.e., late nights, evenings).
- Taxable Wage Base
The maximum amount of employee compensation subject to Social Security, FUTA, and state unemployment insurance taxes.
- Tipped Employee
An employee who works as a food server, baggage handlers, hairdressers, and other occupations in which the employee regularly receives $30 or more a month in money and goods for services performed by. Tips go beyond the stated amount of the bill and are given voluntarily.
- Withholding Rate
Total percentage of withholding for a taxing jurisdiction.
- Local Withholding Rate
Total percentage of withholding for a taxing locality.
- Local Tax Rate
Percentage of withholding for a locality.
- School Rate
Percentage of withholding for a school district.
- FMLA
See "Family Medical Leave Act"
- Family Medical Leave Act
The Family and Medical Leave Act (FMLA) requires that all covered employers provide their eligible employees with 12 weeks of unpaid leave during any 12-month period for one or more of the following reasons: the birth of a child, placement with the employee of an adopted child, to take care of an immediate family member with a serious health condition, or for leave when the employee has a serious medical condition. This generically refers to both Federal and State laws.
- Withholding Allowances
For each withholding allowance claimed, the employee reduces the amount of wages subject to federal income tax withholding.
- Business Tax Credit for Employer-paid FICA on Tips
This tax credit is available to employers at food and beverage establishments
--- not to other types of tipped employment. Also, it applies only with respect
to tips not already used to support a tip credit for minimum wage rate purposes.
The credit is against the business income tax of the employer and is claimed by
filing IRS Form 8846, Credit for Employer Social Security and Medicare Taxes
Paid on Certain Employee Tips.
- HIPAA
HIPAA: The Health Insurance Portability & Accountability Act of 1996 (August 21), Public Law 104-191, which amends the Internal Revenue Service Code of 1986. Also known as the Kennedy-Kassebaum Act. For more information click on this link HIPAAdivisory
Web site
- FICA Tip Credit
See Business Tax Credit for Employer-paid FICA on Tips.
- Employee
An individual performing services for an employing unit, as defined by state law, under a master/servant or employer/employee relationship.
- Taxable Fringe Benefit
The value of certain noncash fringe benefits received from an employer
is considered part of an employees compensation. An employer generally must
withhold income tax on these benefits from an employees regular pay for the
period the benefits are paid or considered paid. For moreinformation on taxable fringe benefits, see Fringe Benefits under Employee
Compensation in Publication
525.
- Imputed Income
The addition of the value of cash/non-cash compensation to an employees’ taxable wages in order to properly withhold income and employment taxes from the wages.
- PIT
Personal Income Tax
- ETT
Employment Training Tax
- OASDI
Old Age Survivor and Disability Insurance
- De Minimis Fringe Benefit
Any employer provided property or service having a value so small that accounting for it would be unreasonable or administratively impracticable, may be excluded from income as a "de minimis" fringe benefit.
- Exempt Status Employee
Employees with "exempt" status are exempt from the protections of the wage and hour
laws of their state, or of the Federal government (Fair Labor Standards Act). Examples
of "exempt" employees under Federal law are "executives," "professionals" and
full-time students, as defined under the Fair Labor Standards Act. "Exempt" employees
must always be paid on a salary basis, not subject to reduction based on the quality or
quantity of work performed.
- Nonexempt Status Employee
If you are a "nonexempt" employee, generally you are protected by the wage and
hour laws of your state, or of the Federal government (Fair Labor Standards Act).
Wage and hour laws require employers to pay at least a certain minimum hourly wage rate
and a premium rate for "overtime" work. They are also a guide for determining
which on-the-job hours constitute "work," and thus must be compensated.
- Full Service Direct Deposit
An ADP banking service that enables employers to deposit their employees' wages directly into banks accounts using ADP partner banks.
- Flexible Spending Account
A plan in which your employer reduces your earnings to pay for your enhanced medical insurance coverage or child care. Under this plan, you receive medical insurance and child care tax free.
- Vesting
An ERISA guideline stipulating that employees must be entitled to their benefits from a pension fund, profit-sharing plan or Employee Stock Ownership Plan, within a certain period of time, even if they no longer work for their employer.
- Tax Bracket
The level of income tax of a given individual, as indicated by the amount of taxes he/she pays on his/her final dollar of taxable income. also called marginal tax bracket or tax rate.
- Advice Number
An identifying number for bank purposes. Used on direct deposit vouchers.
- Benefit Accrual
Hours that are considered an employee benefit, such as paid vacation or paid sick hours, are sometimes accumulated (accrued) by the employee over a period of time.
- Disposable Income
Earnings minus deductions required by law to be withheld. These required deductions
include the following
- Federal, state, and local taxes
- Mandatory union dues or retirement/pension plan contributions (such as
for government workers), if allowed for a particular lien type and jurisdiction
- Any additional earnings or deductions specified on the lien notification
Note: Other lien deductions, such as support payments, are not considered “deductions
required by law” unless specified on the lien notification
- Levy
See also Tax Levy
- TotalPay®
This comprehensive payroll payment service combines the freedom of Full Service Direct Deposit with the convenience of ADPCheck. Employees choose either method, and ADP distributes employees' pay accordingly -- directly into employee-designated bank accounts or with paper checks issued on an ADP account. TotalPay creates a complete solution, providing you with added flexibility.
- Multi-Jurisdiction
Multi-Jurisdiction is a feature that allows the accumulation of tax/taxable information under the same file number for an employee who changes tax jurisdictions and tax statuses (state, local, worked-in, lived-in, exempt, non-exempt) during the course of a calendar year. W-2s for each jurisdiction will be produced at year-end.
- COBRA
Consolidated Omnibus Budget Reconciliation Act of 1985. This Act requires that continuation of group insurance coverage be offered to covered persons who lose health or dental coverage due to a qualifying event as defined in the Act. For more information visit http://www.dol.gov/ebsa/faqs/faq_consumer_cobra.html.
- COBRA Qualifying Event
An event that allows insurance coverage or an extension of insurance coverage for an employee, spouse or dependent. Such events may be marriage, birth/adoption/placement, loss of group health plan coverage, divorce/legal separation, death of the covered employee, loss of dependent’s eligibility for coverage, etc.
- Sarbanes-Oxley Act
The Sarbanes-Oxley Act was signed into law in an effort to prevent or reduce the incidence of corporate and securities fraud. Significantly, the Act (technically named "The Corporate and Criminal Fraud Accountability Act of 2002") provides protection to, and even encourages, employees who would report such fraud.
Sarbanes-Oxley provides the most forceful protections to date for corporate whistleblowers. It prohibits retaliation against whistleblowers, reinforces the act of whistleblowing, and requires public companies to adopt a code of business ethics and protocols for receiving and reviewing reports of ethical wrongdoing. More importantly, the Act enforces compliance by making both corporations and individuals accountable for their actions via administrative, civil, and criminal enforcement mechanisms.
- Short term disability (STD)
Short term disability (STD) pays a percentage of your salary if you become temporarily disabled, meaning that you are not able to work for a short period of time due to sickness or injury (excluding on-the-job injuries, which are covered by workers compensation insurance). A typical STD policy provides you with a weekly portion of your salary, usually 50, 60, or 66 2/3 percent for 13 to 26 weeks.
- STD
See Short Term Disability
- Overpayment
An amount of benefits paid to an individual to which the individual is not legally entitled, regardless of whether or not the amount is subsequently recovered.
- Unemployment Compensation(UC or UI)
A program under which an individual who is unemployed through no fault of his own is paid weekly benefits based upon his past wages in employment covered by State or Federal UC laws.
- Employee Contributions
The unemployment compensation taxes required by a very few State unemployment compensation laws to be deducted by the employer from an employee's pay and paid with the employer's contribution to the State agency.
- Employer
An employing unit, as defined, subject under State or Federal unemployment compensation laws.
- Deductions
An amount that is or may be subtracted from an employee's paycheck. They can be taken pre-tax or after tax depending on the type of deduction. The employee must agree to have deductions withheld from their paycheck
- Dependent
A person who is claimed as a dependent must:
- be a child of the employee who is either under 19 or a full-time student under 24, or
- be a child of the employee who is a full-time student over 24 who is reasonably expected to receive less than $3,000 of income during the taxable year, or
- be reasonably expected to receive less than $3,000 of income during the taxable year, or
- be permanently and totally disabled and receive income for services performed at a sheltered workshop operated by a charity or government
- receive more than half his support from the employee;
- be a citizen, national, or resident of the United States, or a resident of Canada or Mexico, or an alien child adopted by and living with a United States citizen abroad;
- and be either:
(1) a child, grandchild, stepchild, parent, grandparent, stepparent, brother, sister, stepbrother, stepsister, in law, aunt, uncle, nephew, or niece of the employee, or
(2) a member of the employee's household for the taxable year and have the employee's home as his principal place of abode; and not file a joint return.
- Bonus
Compensation received by an employee for services performed. A bonus is given in addition to an employee's usual compensation.
- Commission
Compensation received by an employee for services performed. Commissions are paid based on a percentage of sales made or a fixed amount per sale.
- Salary
Compensation received by an employee for services performed. A salary is a fixed sum paid for a specific period of time worked, such as weekly or monthly.
- Biweekly
Once every two weeks; type of payroll period that can be used in the percentage of wage-bracket method of withholding.
- Filing Status
Marital status of an employee for withholding purposes.
- Highly Compensated Employee (HCE)
In the context of certain fringe benefit plans, an employee who is an owner or officer of a business or whose salary exceeds a certain amount (indexed each year for inflation). Many benefits offered by employers do not qualify for favorable tax treatment if they discriminate in favor of highly compensated employees. And employers may also be restricted in their use of safe-harbor valuations of benefits provided to such employees.
- Involuntary Deductions
Deductions over which the employers and employees have no control.
- Lookback Period
The 12-month period running from July 1 of the second preceeding calendar year through June 30 of the preceeding calendar year; the employer's payroll tax liability during this period determines its depositor status for the current year.
- Overtime
Hours worked by nonexempt employees in excess of maximums set by federal or state law that must be compensated at a premium rate of pay (e.g., under the FLSA, all hours worked over 40 in a workweek must be paid at not less than 150% times the employee's regular rate of pay)
- Overtime Premium
Amount equal to one half of an employee's regular rate of pay times all overtime hours worked
- Retroactive Pay
Pay for time worked in a previous workweek; retroactive pay must be applied to both regular and overtime hours.
- Severance Pay
A payment made by an employer to terminated employees (usually those who are terminated through no fault of their own) that is designed to tide them over until new employment is secured.
- Social Security Administration (SSA)
The federal government agency that administers social security.
- Social Security Number (SSN)
An individual's taxpayer identification number; it consists of nine digits in the format 000-00-0000.
- Supplemental Wages
Compensation received by employees other than their regular pay; such as bonuses, commissions, and severance pay; income tax may be withheld from such payments at a flat rate under certain circumstances.
- Supplemental Wages
Compensation received by employees other than their regular pay; such as bonuses, commissions, and severance pay; income tax may be withheld from such payments at a flat rate under certain circumstances.
- Taxpayer Identification Number (TIN)
A social security number, employer identification number, or an individual taxpayer identification number which serves as the taxpayer's account number with the IRS.
- 940 - Employer's Annual Federal Unemployment (FUTA
Filed annually, the Form 940 reconciles the employer's payment of FUTA taxes during the year, showing the calculation of the full unemployment tax liability and the credit for unemployment taxes paid to the individual states.
- 941 - Employer's Quarterly Federal Tax Return
A federal return that displays taxable wages and taxes, and shows all FIT, Social Security, and Medicare liabilities incurred during a specific quarter.
- 941 - Schedule B
Schedule B is an attachment to Form 941, showing a breakdown of daily tax liabilities. Schedule B must be filed quarterly when the employer has a tax liability of $100,000 or more on any day, or when the employer is required to deposit payroll taxes on a semi-weekly schedule.
- 941PR - Employer's Quarterly Tax Return
The Form 941PR displays taxable wages and taxes, and shows all FIT, Social Security, and Medicare liabilities incurred during the quarter. It is filed quarterly by employers whose principal place of business is Puerto Rico.
- 943 - Employer's Annual Return for Agricultural
The Form 943 displays taxable wages and taxes, and shows the liabilities incurred on a monthly basis.
- 1096
Form 1096 is filed by individuals who withdraw all available retirement funds from their retirement plan.
- 1099
An annual statement showing non-wage compensation that must be reported to the federal government on an individual's personal return. Form 1099 can be issued to employees or non-employees of a company.
- 1099-R
An annual statement of disbursements and applicable taxes from any retirement plan (such as IRA accounts).
- Acquisition
See Merger / Acquisition / Divestiture Analysis.
- ADP®
Automatic Data Processing. (NYSE-ADP).
- AE (Account Executive)
An ADP associate responsible for converting new clients to ADP's Payroll System and completing the required legal documents for Tax Filing Service clients.
- Automated Clearing House (ACH)
A Federal Reserve Bank acting on behalf of an association of financial institutions that operates a facility (system) that serves as a clearinghouse for direct deposit or other electronic payment transactions; entries are received and transmitted by the ACH under the rules of the association. Funds moved from bank A to bank B must go through the ACH.
- AutoPay®
ADP's primary payroll processing system. AutoPay is used in conjunction with ADP products and services typically targeted to companies with more than 100 employees.
- City or Local Income Tax
A withholding tax deducted from an employee's wages as required by a city or local jurisdiction. The amount of withholding varies with the amount of earnings, frequency of pay, number of claimed exemptions, and marital status.
- Client Service Representative (CSR)
An ADP associate responsible for answering client questions and resolving client inquiries.
- Covered Wages
Under FUTA, wages include all cash payments made to employees for services rendered, including salaries, commissions, vacation allowances, fees, bonuses, back pay and many fringe benefits. It does not matter in what form the payment is made, when it is made, or on what measurement of production it is based. Wages also include the cash value of remuneration paid other than cash, such as the reasonable value of food or lodging allowed to an employee as part of the employment relationship. Certain payments and benefits are considered exempt under FUTA, as an example, cafeteria plan contributions are only exempt in about half the states. Necessary business expenses incurred in connection with employment and reimbursed or advanced to employees (such as per diem allowances and traveling or moving expenses) are usually not considered taxable wages. For business expenses to be exempt from wages the employer must identify those payments on separate detailed records. If properly documented most states will consider such payments exempt, even if not specifically exempted by law or regulations.
- DBA
See Doing Business As.
- Disability Insurance (DI)
A monetary compensation plan provided by the government and/or an employer to support employees who are disabled due to illness or injury.
- District Manager (DM)
Refers to an ADP sales associate.
- Divestiture
When an employer sells all or part of its business to an unrelated entity.
- Doing Business As (DBA)
The name under which an individual or business operates.
- Earned Income Credit (EIC)
A special federal program that allows low-income employees to be reimbursed by their employers for a portion of their Federal Income Tax (FIT) withholdings. Employer can then claim those reimbursements as credits on Form 941 (Quarterly Federal Return).
- Easy Pay
ADP payroll solutions for companies with 1 to 99 Employees.
- EE
Employee.
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