A Guide through Pay Stub Deductions

A pay stub usually show a breakdown of deductions make from your monthly earning. Every month, you will get your check together with a pay stub where you will find information regarding deductions such as insurance and taxes.. Another feature of a pay stub is the codes for earnings and deductions which are usually specific to individuals. Most people do not always understand pay stub deductions and end up raising complaints to their employers. As an employee, you should know the deductions from your salary and the reasons as to why. By reading the article herein, you will get to learn more about different pay stub deductions and what they mean.

Your paycheck is usually less than what the employer promised. One of the things that will reduce your monthly earnings is Federal Insurance Contributions Act (FICA) deductions. The reason for the Federal Insurance Contributions Act FICA deductions is to finance Medicare which is a healthcare program for people who have reached 65 years. Also, you have the legal mandate to contribute towards the Social Security Program. Social Security Program deduction is usually indicated as Fica SS Tax. 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. Federal tax is usually not the same in all individuals as it depends on the number of allowances and tax rate. Apart from allowances and tax rate, the federal tax also depends on retirement contributions and pre-tax expense on health and insurance.

The other item in your pay stub is State Disability Insurance (SDI). This is a contribution towards taking care of people living with disability. As a resident of California, you will have to pay SDI deductions. You will be entitled to a fraction of your salary if you go for either family or disability leave. Finally, the reduction in your salary is attributed to miscellaneous deductions. On miscellaneous deductions list, you will find the deductions that you sign up for such as retirement, health insurance, and cafeteria plan. Miscellaneous deductions usually come before taxes hence you can sign up for them to lower your taxable income.

In conclusion, you should know all your deductions before starting a new job. The deductions that you will find in your pay stub are usually specific to states. You should not hesitate to report to the relevant authorities if you notice that things are not adding up in your pay stub.

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