How To Read Pay Stub Deduction Codes?
You're bleeding money and don't even know it.
Most people glance at their paycheck amount and move on...
...but hidden in those cryptic deduction codes could be costly errors draining your account with every deposit.
One uncaught mistake could cost you hundreds or even thousands of dollars a year.
Ready to decode your pay stub and protect your hard-earned cash?
A Breakdown of Pay Stub Deduction Codes
Deductions will be different based on an individual's tax and W-4 status. Some deductions are taken out prior to standard tax deductions. These are things like a 401K and any insurance or retirement deductions.
Other things like Federal Income Tax, Medicaid and Social Security taxes are taken out of each check automatically. These appear on every pay stub.
Each stub will include a year-to-date box that will allow you to see how much of each type of tax has been deducted for that year.
Each type of deduction includes a code that shows up on your pay stubs. These pay stub deduction codes can be confusing, as they are not always self-explanatory. To help you out, here is a list of the most common deduction codes and what they mean.
Common Deduction Codes
Your pay stub speaks in code, literally. Here's what those mysterious abbreviations actually mean:
Tax Deductions:
- FED TAX - Federal Income Tax Withheld
- STATE TX - State Income Tax Withheld
- MEDICARE - Federal Medicare Withheld
- FICA - Employees' portion of paid Social Security
Benefits & Insurance:
- ERA - Educational Retirement Act Contributions
- INS / MED - Insurance or medical savings deductions
- SWT or FED - Federal withholding income tax deductions
- LIFE - Life insurance deductions
- SS or SSWT - Social Security or Social Security Tax Withheld
Key Terms:
- YTD - This is the year-to-date code
- GROSS - Earnings prior to deductions
While not every pay stub will be exactly the same, they will use these or a slight variation of these. Other codes exist for special deductions like retirement plans or contributions. If you're having trouble understanding them, your employer should be able to help you out.
Be Clear About Your Pay Stubs
Although pay stub deduction codes might seem confusing, knowing the basic abbreviations and what they mean will allow you to keep track of what is being deducted. If you don't typically look at your pay stubs, it might be a good idea to take a peek every once in a while just to make sure everything is in order.
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Also Read:
- Common Tax Deductions or Self-Employed Write-Offs You Could Claim