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.
Everyone must pay for the Medicare program which is instituted in the Federal Insurance Contribution Act. 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.
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 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.
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.
The pay stub will also have a section for federal tax, which should not be confused with Social Security or Medicare deduction, and the amounts will be arrived at after taking consideration of your tax rates and allowances. 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. Whether you are taking a disability leave or family leave, your employer is responsible for paying you like a certain percentage of your salary which takes care of the Paid Family Leave or the Disability Insurance Leave.
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.