PRESENTED BY YOUR PAYSTUB MAKER 06-26-2019
We are living in a paperless world, even the paper for the dollar bills is used less and less every day. Money moves online, and salaries are paid directly into your bank account and spent by plastic cards with electronic data on them. As a result of this electronic money transfer, people spend their money without looking for their pay stubs.
Even if you stop the daily run and read your pay stubs, you may misunderstand the terms and what was paid by your deduction.
You should know where your money goes and what you get back for this money. The federal and state taxes are the money that goes for the national and state budgets that give you the protection from local and international threats and other domestic responsibilities. The other deductions are related to your health insurance and retirement. You should be able to understand the codes that are near the amounts of deductions and withholdings on your pay stubs.
What are the deduction codes on a pay stub?
When you look at your pay stub, you can see near the different amounts a few letters. Those are the abbreviations or codes that refer to the subject that this amount is deducted.
You can see on your pay stub the mandatory tax deductions for state and federal taxes. There are withholdings for health insurance and Social Security.
There are benefits like life insurance that is paid by both sides, employer and employee. You will see your part in the premium on the deductions from the gross salary.
Below are the pay stub deduction codes, and what they stand for:
- FICA – Federal Insurance Contributions Act
- YTD – Year-To-Date
- FL – Family Leave
- FWT – Federal Withholding Tax
- SWT – State Withholding Tax
- INS/MED – Insurance or Medical deductions
- 401k/Ret – Retirement contribution
You can find more codes, but they are not that common like those mentioned above.
Federal Income Tax quotes from IRS
Employers generally must withhold federal income tax from employees’ wages. To figure out how much tax to withhold, use the employee’s Form W-4 and withholding tables described in Publication 15, Employer’s Tax Guide.
You must deposit your withholdings. The requirements for depositing, as explained in Publication 15, vary based on your business and the amount you withhold.
There are four most used tax deductions on a pay stub.
The following deductions are the most common that you can see on a pay stub:
- Federal Withholding Tax (FWT)
The federal government collects the income tax from your salary. It is calculated according to your gross income based on tax brackets, the more you make, the more you pay. Every pay period has its tax deduction. Ending the tax year, you can adjust the total tax paid with the exemption you may have. The government uses this money for the national budget. - State Withholding Tax (SWT)
The money for the State’s budget comes from the tax that the state collects from the states working people and businesses. The same as the federal government the tax money goes to the state’s budget. In some places, you can be paying local tax too. - Federal Insurance Contributions Act (FICA) – Medicare
Medicare will collect 1.45% b deduction it from your salary. - FICA – Social Security
A social security tax is deducting currently 6.3% from your salary. This money will give you the protection as you can read Here
The five mandatory deductions you will see on your pay stub?
There are four mandatory deductions that you will see on all pay stubs and one that is conditional.
- Federal tax withholding
- State tax withholding
- FICA – Medicare
- FICA – Social Security
- Court-ordered payments
Paid net in cash
The fifth mandatory deduction “court-ordered payments” covers particular court orders for the payments like alimony, child support and other payments ordered by the court. The amount of this kind of deduction will be deducted from the net income, and it means after the other four mandatory deductions were paid.
To save your time and avoid confusion while preparing the payroll for your staff or yourself as an independent worker. You can use the easy and secure pay stub generator. paystubmakr.com, where deductions are auto-calculated instantly after that you input the time you worked and rate per hour you are paid. You will have the pay stub on your email inbox. All that you need to do is download it, save it as a record and print it if you need a hard copy. Make your pay stub.
paystumbmakr.com team thanks you for a visit and reading this blog Paystub
Pay stub site
Disclaimer: John Wolf and paystubmakr.com are making a total effort to offer accurate, competent, ethical HR management, employer, and workplace advice. We do not use the words of an attorney and the content on the site is not given as legal advice. The website has readers from all US states which all have different laws on these topics. The reader should look for legal advice before taking any action. The information presented on this website is offered as a general guide only and never as