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.
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. 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.
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.
You will notice that your pay stub will contain a section that articulates the amounts that you are supposed to pay for the state taxes in the state tax column. 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 reason why federal tax varies is because of various other factors such as the retirement contributions you make, the amounts of pre-tax expenses, additional health insurance costs, and employee benefits you get.
All California residents who are employed are required to pay for the State Disability Insurance, commonly known 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.
The miscellaneous deductions break down other significant payments you are making, such as your health insurance, cafeteria plan, or other retirement plans. The best way to ensure that you have a less taxable income is by having health plans as they come before the taxes. Although some states may have their unique deductions, the above deductions apply for most residents to help you plan effectively after your earnings.