What are Pay Stub Deduction Codes?

To get your payroll correct, you need to have the correct information, which includes the data required to create pay stubs. A pay stub is the list of all the main information which is related to the employee’s earnings.

Both the employee and employer need to understand the information on a pay stub. Employers must create accurate pay stubs that match the gross pay, tax withholdings, and other payroll amounts.

In this blog we will explain the pay stub deduction codes and their information, So, without further ado let’s get started.

Information Needed To Create A Pay Stub 

Decide upon the following information for each employee:

• Payroll Cycle: The number of pay periods will determine how much salary is paid on every payroll date. It also showcases the beginning and ending days for an enumerated hourly payroll.

• Wages: Gross and net pay. Wages might be based upon a salary, using an hourly rate of pay.

• Tax Withholding: State, Federal and Local amounts withheld for taxes.
• Benefit Withholding: Amount which is withheld for the employee’s share of insurance premium.

The rules regarding pay stubs vary from state to state. Some states require employers to provide pay stubs to employees while other states do not. Businesses should confirm the requirements in every state where they employ workers.

Employees should keep their current pay stubs as proof of income. If an individual applies for a loan, the pay stub confirms the borrower’s gross income. The pay stub information should match the data on every employee’s year-end W-2 form, which the individual uses to file their personal income tax returns.

Uncovering FICA, FUTA and SUTA Taxes

A pay stub must be reporting FICA, FUTA and SUTA tax information. FICA tax is collected to fund Social Security and Medicare. In 2024 the employee tax for Social Security is 6.2% on the earnings earned up to $137,700. The Medicare tax rate is 1.45% on all the wages, and high-income taxpayers will pay an additional 0.9% tax for Medicare. If an employee is not a high-income taxpayer, the total employee FICA tax rate is 7.65%.

Employers also pay 7.65% and the cost is then deducted as a business expense. The employer’s payments are included on a pay stub.

Pay Stub Deduction Codes

Most basic pay stub deduction codes:

• FED, FIT or FWT: Federal income tax withholding

• State, SIT or SWT: State income tax withholding

• FICA: FICA taxes paid for Medicare and Social Security

• YTD: Year-To-Date

• MED: Insurance deductions for health, vision and dental insurance

• INS: Insurance deductions for other coverage like life insurance

• 401(k): 401(k) contributions into a retirement plan

• FSA or HSA: Contributions into the flexible spending account or a health savings account

Conclusion

Stub Builder provides you with a user-friendly and smooth check stub maker which is easy and efficient to use.