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. Another feature of a pay stub is the codes for earnings and deductions which are usually specific to individuals. Most people are usually not informed about a pay stub thus reporting complaints to their employers when they receive their checks. As an employee, you should know the deductions from your salary and the reasons as to why. The article herein is, therefore, a guide through pay stub deductions.
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 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 indicated as Fica SS Tax. You should know that you can claim your SS benefits when you reach 67 years which is the retirement age.
The state is also entitled to a share of your income as state tax. State tax is column is only found in pay stubs of individuals in specific states. As a resident of Texas, Nevada, Alaska, Florida, and Washington, you will not have to worry about this deduction as it is not applicable. Also, you will find 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.
The other item in your pay stub is State Disability Insurance (SDI). It is meant to take care of individuals living with disability. In California, SDI deduction is usually mandatory. Therefore, if you are going for a family or disability leave, you will receive a percentage of your salary. Finally, a pay stub usually contains miscellaneous deductions. Miscellaneous deductions usually include retirement, cafeteria plan, and health insurance among other things that you have signed up for. 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. In case of an issue with your pay stub, you should report to the relevant authorities.