Learning The Secrets About
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. In a pay stub, you will get different codes for the individual earnings and deductions. 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 monthly earning are always less than the salary that you agreed when you landed a job. First, you should know that Federal Insurance Contributions Act (FICA) has a share in your salary. 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 referred to as Fica SS Tax in your pay stub. Once you attain the retirement age, you can claim your SS benefits.
State income tax is the other thing that you will find in your pay stub. 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. Also, you will find federal tax. Federal tax is usually not the same in all individuals as it depends on the number of allowances and tax rate. Moreover, the amount that you will pay as a federal tax depends on the retirement contributions and pre-tax expenses on health and insurance.
Also, you will find a State Disability Insurance (SDI) column in your pay stub. 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. 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 usually differ in states. However, if you realize that your deductions are inaccurate, you should report to the relevant authorities.