A pay stub is a paper that shows deductions from the amount of money earned in a monthly. Every month, you will get your check together with a pay stub where you will find information regarding deductions such as insurance and taxes.. In a pay stub, you will get different codes for the individual earnings and deductions. Most people do not always understand pay stub deductions and end up raising complaints to their employers. Hence, you should learn about the amount being withheld from your earning and why. The article herein is, therefore, a guide through pay stub deductions.
Your monthly earning are always less than the salary that you agreed when you landed a job. The first explanation for the difference is the Federal Insurance Contributions Act (FICA). The money that is deduced by FICA is usually channeled to Medicare program meant for individuals who have reached 65 years. Also, you have the legal mandate to contribute towards the Social Security Program. Social Security Program deduction is usually referred to as Fica SS Tax in your pay stub. You should know that you can claim your SS benefits when you reach 67 years which is the retirement age.
Next on your pay stub you will find state tax deductions. State tax is column is only found in pay stubs of individuals in specific states. Residents of Texas, Nevada, Alaska, Florida, and Washington, do not always pay state tax. Apart from state tax, you will find federal tax column in your pay stub. 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. 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. 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. Also, you should note that the items you find in a pay stub usually vary from one state to another. In case of an issue with your pay stub, you should report to the relevant authorities.