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 confusing to understand the language used in the pay stub because of the use of short forms and coded texts and the following are some of the details you should know about the deductions.
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. The FICA Med Tax is the abbreviations for the amount you pay for the Medicare program which takes care of citizens who are aged 65 years, and those who qualify for the Medicare facility.
The FICA SS Tax in your pay stub is meant for the Social Security tax that you pay, which is also instituted in the Federal Insurance Contribution 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.
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. Before you get a federal tax, some calculations will be done on your pre-tax expenses, retirement contributions, health insurance payments, and employee benefits to arrive at an accurate figure.
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.
You should look out for the miscellaneous deduction on your pay stub, which highlights other expenses such as their retirement, cafeteria plan, and other health insurance plans you have. 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.