Form W-9 is an IRS document that businesses use to request a worker’s taxpayer identification number (TIN) and certification. It is commonly completed by freelancers, independent contractors, and vendors so companies can prepare Form 1099 to report income paid. While the W-9 itself isn’t filed with the IRS, it ensures businesses have the correct tax details on record.
Form W-5 was an IRS form that employees could submit to their employer to receive part of their Earned Income Credit (EIC) in advance with each paycheck. Instead of waiting until tax filing season, workers accessed a portion of the credit throughout the year. This form was discontinued after 2010, but it played a role in improving cash flow for low- to moderate-income workers.
Form SS-8 is an IRS document that businesses or workers can file to request an official determination of a worker’s employment status. It helps clarify whether a person should be treated as an employee, with payroll tax obligations, or as an independent contractor. This form is useful in avoiding misclassification issues that can lead to tax penalties.
Form 1099-MISC is an IRS tax form used to report miscellaneous income that doesn’t fall under standard wages. It is often issued for payments such as rent, royalties, prizes, awards, or certain contractor payments. Businesses must file this form to ensure income is properly reported, and recipients use it to calculate taxable earnings.
Form 1099 is a series of tax documents the IRS requires to report various types of income earned outside of traditional employment. Commonly, it’s issued to freelancers, independent contractors, and gig workers, but also applies to interest, dividends, and other income. Employers and payers must file this form so both the worker and IRS track taxable earnings.
Form 673 is an IRS document that U.S. citizens working overseas can submit to their employer. It allows them to claim an exemption from federal income tax withholding on income they expect to exclude under the Foreign Earned Income Exclusion. By filing this form, employees can reduce unnecessary withholdings and improve their cash flow while abroad.
Earned Wage Access (EWA) is a payroll service that allows employees to withdraw a portion of the wages they’ve already earned before their scheduled payday. It helps workers cover urgent expenses, avoid high-interest loans, and manage cash flow better. For employers, EWA can boost employee satisfaction and retention without changing standard payroll cycles.
Disposable earnings refer to the amount of income an employee takes home after legally required deductions such as taxes, social security, and retirement contributions. This figure is important because it determines how much of a worker’s pay is available for personal use or subject to wage garnishments. Employers and courts often use disposable earnings to calculate repayment obligations.
A discretionary bonus is an additional payment that an employer chooses to give employees, usually to reward performance, loyalty, or company success. Unlike guaranteed bonuses, it is not promised in advance and is awarded at the employer’s sole discretion. This flexibility allows companies to motivate staff without long-term financial commitments.
Crypto payroll allows businesses to compensate employees using digital currencies such as Bitcoin, Ethereum, or stablecoins. It provides faster cross-border payments, reduced transaction fees, and access to decentralized finance. However, it also involves tax, compliance, and volatility considerations that employers and employees must manage carefully.
A compensation package is the complete set of financial rewards and benefits an employer provides to an employee. It includes base salary, bonuses, allowances, health insurance, retirement plans, and other perks. A well-structured compensation package helps attract, motivate, and retain talent by balancing fixed pay with additional incentives.
Bi-weekly payroll is a system in which employees are paid once every two weeks, usually on the same weekday. This schedule results in 26 paychecks per year, slightly more than a semi-monthly system. It is a common choice for employers because it balances consistency for employees and manageable cash flow for businesses.
A common law employee is someone whose work and duties are controlled by an employer, not just in results but also in how tasks are performed. This definition helps distinguish employees from independent contractors for tax and legal purposes. Employers of common law employees are responsible for payroll taxes, benefits, and labor law compliance.
Base salary is the predetermined amount of money an employee receives for their work, typically expressed as an annual figure. It does not include variable components like bonuses, overtime pay, or allowances. Base salary provides financial stability and forms the foundation of an employee’s overall compensation.
Base pay is the fixed amount of money an employee receives for performing their job, excluding bonuses, overtime, commissions, or benefits. It serves as the foundation of an employee’s total compensation package. Base pay is usually determined by factors like job role, skills, market rates, and experience.
Back pay refers to wages that an employer owes an employee for work already performed but not properly compensated. It may result from payroll errors, underpayment, wrongful termination cases, or delayed raises. Back pay ensures employees receive the full amount they are legally entitled to.
An allowance is a set amount of money provided by employers to employees in addition to their regular salary. It is usually given to cover work-related expenses such as housing, transportation, or meals. Allowances can be taxable or non-taxable depending on local labor and tax laws.
Accrued payroll is the total amount of wages, bonuses, and benefits employees have earned during a period but haven’t yet been paid. It is recorded as a liability on the company’s balance sheet until payment is made. This practice ensures financial accuracy and shows the company’s short-term obligations to its workforce.
Accrual payroll is the accounting method where employee wages, benefits, and related expenses are recorded when they are earned, not when they are paid. This ensures accurate financial reporting and helps businesses match payroll costs with the correct accounting period. It provides a clearer picture of a company’s obligations and cash flow.
The 14th Month Pay is an additional salary payment some employers provide on top of regular wages and the 13th month pay. It is often given as a mid-year or year-end bonus to reward employees and boost retention. While not mandatory in all countries, it is a common practice in parts of Europe, Latin America, and Asia.