A pay stub is a paper that shows deductions from the amount of money earned in a monthly. All paychecks usually come with a pay stub so that you can see the amount removed for taxes and insurance. In a pay stub, you will get different codes for the individual earnings and deductions. Most people are usually not informed about a pay stub thus reporting complaints to their employers when they receive their checks. Hence, you should learn about the amount being withheld from your earning and why. By reading the article herein, you will get to learn more about different pay stub deductions and what they mean.
Your monthly earning are always less than the salary that you agreed when you landed a job. One of the things that will reduce your monthly earnings is Federal Insurance Contributions Act (FICA) deductions. The deduction is usually made to the Medicare program that takes care of individuals who have hit 65 years. Apart from Medicare program, another deduction will be made from your earning towards Social Security Program. Social Security Program deduction is usually referred to as Fica SS Tax in your pay stub. Once you attain the retirement age, you can claim your SS benefits.
Next on your pay stub you will find state tax deductions. State tax is not always applicable in all states. Some of the states that do not allow state income tax include Texas, Nevada, Alaska, Florida, and Washington. The other tax that is associated with the government is the federal tax. Some of the things that influence federal tax include allowances and tax rate among other things. Moreover, the amount that you will pay as a federal tax depends on the retirement contributions and pre-tax expenses on health and insurance.
State Disability Insurance (SDI) also have a share in your income. It is meant to take care of individuals living with disability. All workers in California as usually subject to SDI deductions. Therefore, if you are going for a family or disability leave, you will receive a percentage of your salary. The last item that you will find in your pay stub is miscellaneous deductions. Miscellaneous deductions usually include retirement, cafeteria plan, and health insurance among other things that you have signed up for. Signing up for miscellaneous deductions is a suitable strategy for reducing your taxable income as they are always deducted before taxes.
In conclusion, you should know all your deductions before starting a new job. The deductions usually differ in states. You should not hesitate to report to the relevant authorities if you notice that things are not adding up in your pay stub.