After working, everyone expects nothing less than a paycheck. One thing that you need to know is that every paycheck usually comes with a pay stub. The pay stub for those who don’t understand is a piece of paper that shows all the deductions that are made on your pay. Due to the fact that pay stub earning and deductions come with codes, some people find it challenging to understand how to pay stub works. Discussed below are some of the deductions you need to know about when you look at your pay stub.
The first deduction on a pay stub is the Fica Med Tax. At times people find themselves not getting exactly what they expected when they first got the job. There is the need to know that Federal Insurance Contributions Act (FICA) has a cut of your pay. The deductions by FICA is particularly used to keep the Medicare program running. The deducted money is used to keep the program that helps those who are over the age of 65.
On your pay stub, you will also realize the Fica SS Tax as part of the deductions made. It is important that you get to know that everyone who is employed is legally obligated to contribute to social security. For those who have seen this type of deduction, it is important to know that it is in support of the social security program. The social security supports eligible beneficiaries especially those with disabilities and the retired employees. Once you reach the retirement age, you need to know that you can claim for the SS benefits.
The other common pay stub deduction is the state tax. When you look at your pay stub, you will find the state taxable wages column. For those states that allow the state income tax, they the residents have a specified amount on it. In case you realize that there is a blank space, you need to know that your state does not allow the state income tax. You need to, therefore, know if your state allows these deductions to ensure that it is not wrongly done.
The other type of deduction common in many people’s pay stubs is the Federal Tax. The tax is usually deducted by the federal government. There are several factors such as allowances and tax rates that affect this form of deductions. On top of that, the retirement contributions and the other benefit as an employee you get determine what you need to pay as federal taxes.
Getting to know what deduction is made in your paycheck as provided on the pay stub is important.