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. It is pretty normal to see the paystub to come in codes for both deductions and earnings. For some people, it may be a challenge to understand the deductions on paystub. It is very important that you know what amount is being withheld and 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 – you may wonder why you’re not able to receive the amount you are expected to get when you were initially given a job offer. This is due to the reason that part of your pay goes to FICA or Federal Insurance Contribution Act. This is actually a federal payroll that is making deductions from your salary to contribute to the Medicare program. These said deductions are made to run the program for those who are 65 years old and above.
Number 2. SS Tax – so long as you are employed, you will be obligated 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 may claim your SS benefits once you hit your retirement age.
Number 3. State Tax – if you are going to check your paystub, you’d notice the column for state taxable wages. If there is an amount specified, you are going to find it in this column and if you do, it means that your state allows state taxes. It will be left blank however if your state isn’t allowing state income tax. Few of the states that levy income tax are Alaska, Florida, Washington, Nevada and Texas.
Number 4. Federal Tax – the federal government takes its fair share of deductions too on top of your Social Security and Medicare paystub deductions. But depending on your tax rate and allowances, the amount is going to be variable. In addition to that, it depends as well on your retirement contributions as well as pre-tax expenses on health insurance as well as other benefits.
Number 5. State Disability Insurance (SDI) – in the state of California, workers are subject to this particular deduction. Assuming that you are covered by SDI, you will be able to benefit from Disability Insurance and Paid Family Leave.