Facts You Should Be Aware Of When It Comes To Pay Stub Deductions
The pay stub is critical document in your paycheck as it breaks down your monthly earnings and the amount that was reduced to pay for certain expenses such as insurance and taxes. 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.
The first deduction you will get in your pay stub is the contribution of the Federal Insurance Contribution Act, which takes care of the Medicare program. When you see the FICA Med Tax abbreviations, then you should know that you are paying for the Medicare program insurance, which facilitates those who are above 65 years and people that qualify for Medicare insurance.
You will also come across the FICA SS Tax, which stands for the Social Security program deductions that you make, which are registered under the Federal Insurance Contributions Act. The social security deductions are meant to cater to those who are disabled and retirees, and you are qualified for the benefits when you are 67 years old.
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. When you live in states such as Texas, Alaska, Nevada, Florida or Washington, you will notice that you will not be required to pay for state tax and it will be blank. Check out these facts for more details.
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.
Pay stubs for people who live in California are slightly different because they contain State Disability Insurance popularly referred to as SDI. When you apply for a family leaves or disability leave days, you will be required to get a portion of your salary to cater for the leave.
The miscellaneous deductions break down other significant payments you are making, such as your health insurance, cafeteria plan, or other retirement plans. It is necessary to take advantage of several health plans to have a reduced taxable income. Although some states may have their unique deductions, the above deductions apply for most residents to help you plan effectively after your earnings. Go here for more info.
Go to https://www.youtube.com/watch?v=-4qkis2FooU for tips on how to read a Pay Stub.