Your Key to Deciphering the Mysteries of Pay Stub Deduction Codes

If you’ve ever taken a hard look at your pay stub, you’ve probably seen all the deductions. These can be alarming to people who are getting their first job. They can even be alarming for people who’ve been in the workforce for a while.

Many of these payroll deductions are withheld taxes, such as for social security and Medicaid. These are known as FICA taxes, as they relate to the Federal Insurance Contributions Act. The total FICA tax is 15.3%.

If you’re a W-2 employee, your employer will pay part of these.

You may also have income taxes withheld. Withheld taxes ensure you don’t owe the government money during tax time.

The other deductions are probably related to your benefits as an employee. Each deduction will have pay stub deduction codes next to them. If you’re confused about what these codes mean, you’re not alone.

Here’s a breakdown of all the pay stub deduction codes you may see in your paycheck.

The Most Common Pay Stub Deduction Codes

First, you should understand your “Gross Pay.” This is the amount of money you earned during the pay period. Deductions will be made from this amount and the remaining cash (“Net Pay”) will go to you.

You likely won’t see all the types of pay stub deduction codes on your pay stub as they won’t apply to you. This makes generating pay stubs is relatively easy. Many employers use a pay stub generation service to create pay stubs, such as New York Pay Stub Generator.

Here are the most common codes you’ll see:

FED

This could also be written as FIT or FITW, but they mean the same thing: Federal Income Tax Withheld. This is the federal income tax withheld from your paycheck.

STATE

This could also be written as SIT or SITW. This stands for State Income Tax Withheld.

If the state listed on your pay stub is not the state you work from, you’ll need to correct it. This is sometimes an issue for remote workers.

OASDI

This could also be written as SS, SOCSEC, or FICA. This is the amount of Social Security tax you’ve contributed through your check.

Your Social Security tax rate should be 6.2%. Your employer covers another 6.2% (for W-2 employees) for a total of 12.4%.

MED

This is the Medicare tax. Your Medicare tax rate should be 1.45%. Your employer should cover another 1.45% (for W-2 employees).

401(k)

If you have a 401(k) account to save for retirement, your contribution to it will be listed here. You should have already set the percentage of your pay you want to contribute. 401(k) accounts are provided by employers.

HSA or FSA

These stand for Health Savings Account and Flexible Spending Account. Not all workers have these. They are tax-advantaged savings and spending accounts you can contribute to.

INS

This is the amount you’ve contributed to your employer-funded insurance plan. It should be the same, or similar, in every pay stub.

Obviously, your insurance is important so you can get medical tests, see the doctor, and stay healthy.

Net Pay

After all your deductions, this is the amount you get to take home. Many workers get concerned by deductions because it feels like their money is being taken away.

There are a few things to keep in mind. For one, there’s no way to avoid taxes. The social security you pay into now is supposed to benefit you later.

Your benefit deductions are important if you have health insurance with your employer, or if you are trying to save in tax advantage accounts.

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There are plenty of other pay stub deduction codes you might see on your pay stub. But these are the ones you’ll see the most. Hopefully, you’ll sleep better now that you know where your money is going!

If you’re looking for other interesting and weird facts, check out the latest news on weirdomatic.com!

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