A pay stub is a paper that shows deductions from the amount of money earned in a monthly. Every paycheck is usually accompanied by a pay stub that shows all deductions such as taxes and insurance. Also, you will realize that a pay stub usually contain codes for earnings and deductions. Most people do not always understand pay stub deductions and end up raising complaints to their employers. For that reason, you will understand your pay stub so that you can know why the deductions are made from your salary. By reading the article herein, you will get to learn more about different pay stub deductions and what they mean.
When you receive your salary, you will realize that the figure is not the same as what you agreed with your employer. One of the things that will reduce your monthly earnings is Federal Insurance Contributions Act (FICA) deductions. The money that is deduced by FICA is usually channeled to Medicare program meant for individuals who have reached 65 years. As an employee, you have the legal obligation 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.
The state is also entitled to a share of your income as state tax. However, this is not always applicable in all the state. Some of the states that do not allow state income tax include Texas, Nevada, Alaska, Florida, and Washington. Apart from state tax, you will find federal tax column in your pay stub. The amount that you pay as a federal tax depends on the 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). 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, 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.