Question

If you currently work for an employer, we know how important it is to receive your paycheck on time. However, have you ever reviewed your pay stub to understand the deduction items on the paycheck and if the paycheck is calculated accurately? In your initial post address the following:

Summarize and explain common deduction items on a pay stub.

Identify and compare which payroll taxes employers and employees are required to pay.

Answer 1

A pay stub is part of a paycheck that lists details about the employee’s pay. It itemizes the wages earned for the pay period and year-to-date payroll. The pay stub also shows taxes and other deductions taken out of an employee’s earnings. And, the pay stub shows the amount the employee actually receives.

Employees do not take home their gross pay. Payroll taxes and other deductions reduce their earnings. The pay stub itemizes deductions so that employees can see amounts taken from their gross pay.

Employee tax deductions: Usually, government agencies (like the IRS and state tax departments) tax an employee’s pay. Common taxes deducted include federal income tax, the employee portion of FICA tax, and, sometimes, state and local income taxes.

Benefits and other deductions: Other payroll deductions shown on a pay stub vary depending on the small business employee benefits you provide.

Employer contributions: Some items included in an employee’s pay stub are not deducted from the gross pay. They reflect amounts you contribute as an employer.

An employer's federal payroll tax responsibilities include withholding from an employee's compensation and paying an employer's contribution for Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA).

• Social Security taxes (6.2 percent up to the annual maximum)
• Medicare taxes (1.45 percent of wages)
• Federal unemployment taxes (FUTA)
• State unemployment taxes (SUTA)