A Better Look at Pay Stub Deductions
Every paycheck that you get oftentimes comes with pay stub. Simply put, this is a piece of paper that tells you the sum of money that you were able to earn for a given period and also, the amount that’s deducted for insurance and taxes. Normally, the paystub is available with codes for both deductions and earnings. For some individuals, it could be a challenge to understand the deductions on paystub. It is vitally important that you know the amount withheld and the reason why.
We will cover some usual deductions present in paystub in this article which will help you a lot to know what it exactly means. If you are interested in today’s subject, then I suggest that you keep on reading.
Number 1. Med Tax – for sure, you are puzzled why you were not able to receive the exact amount you were told to in your job offer. Well, FICA or Federal Insurance Contribution Act has share in your pay. This is actually a federal payroll that is making deductions from your salary to contribute to the Medicare program. These deductions are designed to run the program for people who are aged 65 years old and above.
Number 2. SS Tax – as long as you’re employed, you are obliged to make contributions to Social Security program. In this program, it is supporting all eligible beneficiaries most especially the ones who are disabled or candidate for retirement. You can claim your SS benefits only when you hit your retirement age.
Number 3. State Tax – you will notice that there’s a column in your paystub saying state taxable wages. If there is an amount specified, you will find it in this column which also means that your state allows state taxes. It will be left blank however if your state isn’t allowing state income tax. Some of the states that levy income tax include Alaska, Florida, Washington, Nevada and Texas.
Number 4. Federal Tax – in addition to Social Security and Medicare paystub deductions, the federal government is taking its fair share. But depending on your tax rate and allowances, the amount is going to be variable. However, this will also depend onto your retirement contributions and at the same time, your pre-tax expenses on health insurance as well as other benefits.
Number 5. State Disability Insurance (SDI) – in state of California, the workers are often subject to this deduction. Assuming that you are covered by SDI, you will be able to benefit from Disability Insurance and Paid Family Leave.
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