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Federal Insurance Contributions Act (FICA) Tax
Provides benefits for retired workers and their dependents as well as for disabled workers and their dependents. Also known as the Social Security tax.
Dependent
A person, other than the taxpayer or spouse, who entitles the taxpayer to claim a dependency exemption.
Federal income tax
The federal government levies a tax on personal income. The federal income tax provides for national programs such as defense, foreign affairs, law enforcement, and interest on the national debt.
Compulsory payroll tax
An automatic tax collected from employers and employees to finance specific programs.
Installment Agreements
To be eligible for an installment agreement, all returns that are due must first be filed. Installment agreements generally require equal monthly payments. The amount of an installment payment will be based on the amount owed and on the taxpayer’s ability to pay that amount within the time legally available for the IRS to collect.
Earned Income Credit
A tax credit for certain people who work, meet certain requirements, and have earned income under a specified limit.
Self-Employment Tax
The self-employment tax rate on net earnings remains the same for 2003. This rate, 15.3%, is a total of 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
Family daycare providers
A family daycare provider is a person engaged in the business of providing family daycare.
Employee
Works for an employer. Employers can control when, where, and how the employee performs the work.
Standard Mileage Rate
For 2004, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck is increased to 37.5 cents a mile for all business miles.
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