Every pay check that you get usually comes with a paystub. Basically, this is a piece of paper which states the amount of money that you have earned for a certain time and also, the amount that’s deducted for insurance and taxes. The paystub usually is available with codes for both deductions and earnings. For some individuals, it could be a challenge to understand the deductions on paystub. It is vitally important that you know the amount withheld and the reason 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 want to learn more about it, then I encourage you to 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. This program is made to help those individuals 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. This type of program provides support to all eligible beneficiaries particularly to those who are running candidate for retirement and disabled. You can claim your SS benefits only when you hit your retirement age.
Number 3. State Tax – if you will look at your paystub, you are going to 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. Then again, if your state is not allowing it, then it will be left blank, simple as that. Few of the states that levy income tax are Alaska, Florida, Washington, Nevada and Texas.
Number 4. Federal Tax – aside from your Social Security and Medicare paystub deductions, federal government takes its fair share too. But depending on your tax rate and allowances, the amount is going to be variable. Aside from that, it will depend on your retirement contributions and your pre-tax expenses on health insurance as well as other benefits.
Number 5. State Disability Insurance (SDI) – in state of California, the workers are often subject to this deduction. Say for example that you’re covered by SDI, you’ll be able to benefit from Disability Insurance and Paid Family Leave.