A pay stub is a paper that shows deductions from the amount of money earned in a monthly. All paychecks usually come with a pay stub so that you can see the amount removed for taxes and insurance. 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.
Your monthly earning are always less than the salary that you agreed when you landed a job. 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. Apart from Medicare program, another deduction will be made from your earning towards Social Security Program. In your pay stub, this deduction is usually indicated as Fica SS Tax. As soon as you hit the retirement age, 67 years, you have the right to claim your SS benefits.
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. 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. In the event of a family or disability leave, you will receive a fraction 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. The deductions are usually given priority hence a suitable means of lowering your taxable income.
When you land your first job, you should research on all the deductions. The deductions usually differ in states. You should not hesitate to report to the relevant authorities if you notice that things are not adding up in your pay stub.