Basic Elements of the Pay Stub Deductions

When you go through your paycheck, you will realize that it has information which contains the deductions and the amount that you made in a particular month. Sometimes it can be challenging to understand the codes used in the pay stub and the following are some of the top details you should know about it.

When you get your salary, you will be expected to pay for the Medicare program, and it will fall under the Federal Insurance Contributions Act. The deductions for the Medicare program will be abbreviated as FICA Med Tax which is meant to support those who are above 65 years and also citizens that qualifies for the Medicare.

As a citizen, you are required to pay for the Social Security program which is a requirement in the Federal Insurance Contribution Act, and it will be abbreviated as FICA SS Tax. The deduction is meant to support those who are disabled, retirees and you can only claim them when you are past the age of 67.

If your state levies income tax, then your pay stubs will have a detailed section which dictates the amount you are required to pay for the state tax. Certain states such as Nevada, Alaska, Texas, Washington, and Florida do not require citizens to pay for the state taxes, and it will contain a blank space in the state tax column.

Your pay stub will also have the amount for federal tax, which is different from Medicare and Social Security, and it will be calculated based on your allowances and tax rate. The calculation will also factor in the details such as the amount you pay for retirement, pre-tax expenses, the employee benefits you get and other health insurance considerations. There are more details that you can view here!

Pay stubs for people who live in California are slightly different because they contain State Disability Insurance popularly referred to as SDI. Your employer is supposed to provide you with a certain percentage of your salary when you take family or disability leave known as the Paid Family Leave or Disability Insurance benefits.

When you check your pay stub, you will also notice the section which covers all different types of covers that you may have such as health insurance, cafeteria plan, or retirement plan among others. Signing for most of these plans can ensure that you reduce the amount that you will be taxed. Every state has its unique way of making tax deductions, and understanding the above details can help you to understand the amount which you will get and which will go for the taxes. Click here for more info.

Understand your paycheck more by going to https://www.youtube.com/watch?v=XQ0f87stf_o.