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. For some people, it is always challenging to interpret the information contained in a pay stub and thus are forced to raise complaints. For that reason, you will understand your pay stub so that you can know why the deductions are made from your salary. Keep reading this article so that you can learn some vital information regarding pay stub deductions in your monthly earnings.
When you receive your salary, you will realize that the figure is not the same as what you agreed with your employer. First, you should know that Federal Insurance Contributions Act (FICA) has a share in your salary. The reason for the Federal Insurance Contributions Act FICA deductions is to finance Medicare which is a healthcare program for people 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. However, this is not always applicable in all the state. Residents of Texas, Nevada, Alaska, Florida, and Washington, do not always pay state tax. The other tax that is associated with the government is the federal tax. The amount that you pay as a federal tax depends on the 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.
State Disability Insurance (SDI) also have a share in your income. This is a contribution towards taking care of people living with disability. All workers in California as usually subject to SDI deductions. In the event of a family or disability leave, you will receive a fraction of your salary. Finally, a pay stub usually contains miscellaneous deductions. Miscellaneous deductions compromises of deductions that you sign up for such as health insurance and retirement. The deductions are usually given priority hence a suitable means of lowering your taxable income.
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. You should not hesitate to report to the relevant authorities if you notice that things are not adding up in your pay stub.