US Payroll & HR Glossary

Form W-2

Form W-2, the Wage and Tax Statement, is the annual IRS form on which an employer reports an employee's wages and the taxes withheld, and which the employer must give the employee by January 31.

Form W-4

Form W-4 is the IRS Employee's Withholding Certificate: the form an employee gives the employer so it knows how much federal income tax to withhold from each paycheck.

FICA

FICA is the US payroll tax that funds Social Security and Medicare: in 2026 employees and employers each pay 6.2% and 1.45% of wages, with Social Security capped at $184,500.

401(k)

An employer-sponsored retirement savings plan funded by payroll deferrals, often with an employer match.

Form 1099-NEC

The IRS form used to report payments of $600 or more to an independent contractor (non-employee).

Gross pay

An employee's total earnings before any taxes or deductions are taken out.

Net pay

The amount an employee actually receives after all taxes and deductions — take-home pay.

Tax withholding

Tax withholding is the federal income tax an employer deducts from each paycheck and pays to the IRS on the employee's behalf, based on the employee's Form W-4.

Overtime pay

Extra pay (1.5× the regular rate) owed to non-exempt employees for hours worked over 40 in a workweek.

FLSA

The US federal law setting minimum wage, overtime, recordkeeping and youth employment standards.