Payroll Glossary - A
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ABC Test: A set of criteria used by many states to determine the relationship of a worker to the organization for which services are performed. A worker meeting these criteria is considered an independent contractor under the state unemployment insurance law.
Accelerated Deposit Rule: Also known as the one-day rule, it requires employers that accumulate a tax liability of $100,000 or more during a deposit period to deposit the withheld taxes on the next banking day after the day the liability was incurred.
Acceptance Agent: A financial institution, college or university, federal agency, or professional tax return Preparer that operates under an agreement with the IRS to aid aliens in processing their requests for Individual Taxpayer Identification Numbers.
Account: The representation of assets, expenses, liabilities, and revenues in the general ledger, to which debit and credit entries are posted to record changes in the value of the account.
Accountable Plan: An employer's business expense reimbursement plan that satisfies all IRS requirements regarding substantiation, business connection, and return of excess amounts in a reasonable period of time.
Accounting Period: The period covered by an income statement (e.g., month, year).
Accrual: The recognition of assets, expenses, liabilities, or revenues before receipt.
AccuWage: A software program available from the Social Security Administration that can be used to test electronic wage reports (Form W-2 information) for proper formatting before submittal to the SSA.
ACH: Automated Clearing House.
Actual Deferral Percentage (ADP): The percentage of wages deferred by employees participating in a salary reduction plan (e.g., ยง401(k) plan). The IRS uses the ADP to determine whether the plan meets the agency's nondiscrimination requirements.
ADA: Americans with Disabilities Act of 1990.
AD&D: Accidental Death and Dismemberment Insurance.
ADEA: Age Discrimination in Employment Act of 1967.
Adjusting Entry: An entry made to update a general ledger account before financial statements are prepared.
Administrative: Denotes regulations, interpretations, announcements, etc., issued by government agen- cies empowered to enforce laws, such as the Internal Revenue Service, the Department of Labor, the Social Security Administration, and the Equal Employment Opportunity Commission.
Adoption Assistance: Financial benefit provided by an employer to an employee to help with the child adoption process. Within certain limitations, it is excluded from federal income tax withholding, though not social security and Medicare taxes.
Advance Earned Income Credit (AEIC): Payments of earned income credit during the year to employ- ees who expect to be eligible for the credit. Employers make the payments out of federal income, social security, and Medicare taxes withheld from the employees wages.
AEIC: Advance Earned Income Credit.
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).
Age Discrimination in Employment Act of 1967 (ADEA): Federal law that prohibits employment discrimination on the basis of an individual's age (40 or older).
Alien: A citizen of a country other than the United States or one of its territories or possessions.
Americans With Disabilities Act of 1990 (ADA): Federal law that broadly prohibits discrimination against individuals with disabilities who can perform the essential functions of a job with or without reasonable accommodation.
Annual Wage Reporting (AWR): The Social Security Administration's system of recording wages reported annually by employers on Forms W-2.
APA: American Payroll Association.
Application Service Provider (ASP): An outsourcing arrangement where the outsourcing company hosts each application at its location and the client gains access to tj application thru an Internet. connection
ASP: See Application Service Provider.
Assets: Resources acquired by a business.
Assignment: See Wage Assignment.
ATM: Automated Teller Machine that dispenses cash from an account via a debit card.
Attachment: See Wage Attachment.
Audit: A review of a business's records and procedures to determine their accuracy and completeness.
Authorization Agreement: In general, a written agreement authorizing an employer to withhold and distribute a portion of an employee's wages to a third party designated by the employee (i.e., direct deposit, union dues, savings bonds, voluntary bankruptcy payments, certain insurance premiums i.e. AFLAC)
Autogen: An IRS program under which the Service will automatically send employers Forms 8109, Federal Tax Deposit Coupons, without a request having to be made.
Automated Clearing House (ACH): A Federal Reserve Bank or private financial institution acting on behalf of an association operating a facility that serves as a clearinghouse for direct deposit transactions. Entries are received and transmitted by the ACH under the rules of the association.
AWR: Annual Wage Reporting.