Question

unit 3 study guide epp - what are the purposes of the following types of forms / paperwork related to employment? i - 9 used to verify the identity and employment w - 4 used by employees to indicate their income tax withholding allowances to their employers so the correct amount of federal income tax can be withheld from their paychecks what is meant by the term \withholding\ in regards to a paycheck? what is fica? what are fica contributions? and when do they get paid? define fica why is it important that the information you select on the w - 4 is accurate? explain the difference between \gross pay\ and
et pay\. personal banking what are the main differences between a checking and savings account? what is the difference between assets and liabilities

Explanation:

• I - 9: Verifies identity and employment - eligibility of employees in the US.
• W - 4: Employees use it to indicate income tax - withholding allowances so correct federal income tax is withheld from paychecks.
• Withholding: Portion of an employee's pay that an employer withholds and sends to the government for taxes.
• FICA: Federal Insurance Contributions Act. It funds Social Security and Medicare. Employees and employers contribute a percentage of the employee's wages, and contributions are made each pay - period.
• Accurate W - 4 info: Ensures correct tax withholding, avoiding over - or under - payment of taxes and potential tax issues at year - end.
• Gross Pay vs Net Pay: Gross pay is total earnings before deductions. Net pay is what an employee takes home after deductions like taxes and FICA.
• Checking vs Savings: Checking for daily transactions, usually with no or low interest. Savings for long - term money storage, earns interest, and may have withdrawal limits.
• Assets vs Liabilities: Assets are economic resources owned with future value. Liabilities are obligations or debts owed.

Answer:

• I - 9: Used to verify the identity and employment - eligibility of employees.
• W - 4: Used by employees to indicate their income tax - withholding allowances to their employers so the correct amount of federal income tax can be withheld from their paychecks.
• Withholding: The portion of an employee's paycheck that an employer withholds and remits to the government for tax purposes.
• FICA: Federal Insurance Contributions Act. It is a U.S. law that requires a deduction from the paychecks of employees and a matching contribution from employers to fund Social Security and Medicare programs. FICA contributions are made each pay - period.
• Importance of accurate W - 4 info: To ensure the correct amount of federal income tax is withheld from paychecks, avoiding over - withholding (which results in a large refund) or under - withholding (which may lead to an unexpected tax bill at tax time).
• Gross Pay vs Net Pay: Gross pay is the total amount of money an employee earns before any deductions are made. Net pay is the amount of money an employee actually takes home after all deductions (such as taxes, FICA, and other withholdings) have been subtracted from the gross pay.
• Checking vs Savings: A checking account is designed for day - to - day transactions like paying bills and making purchases. It typically offers easy access to funds through checks, debit cards, and ATMs, and may have little or no interest. A savings account is intended for storing money for the long - term, usually earns interest, and may have limitations on the number of withdrawals or transfers per month.
• Assets vs Liabilities: Assets are resources owned by an individual or entity that have economic value and are expected to provide future benefits. Liabilities are obligations or debts that an individual or entity owes to others.