How glad it feels to get closer to your payday! But, it’s even better if you know what’s on your paycheck to have full control of your finances.
Let’s talk taxes here. Every paycheck has tax amounts deducted. But, not every paycheck has the same amount deducted as taxes. The taxes and deductions as well as bonuses and withholdings vary based on different criteria. The state you live in and your marital status play a major role in this decision. Being an employee, it is your responsibility to know the amounts going out from your paycheck as taxes. This will save you from any surprises during tax season.
Which Details are Reflected on Your Paycheck?
Needless to say, that the paycheck contains the basic details of the employee and the firm, deductions, and benefits received by the employee. However, the paycheck for an independent contractor might appear different because they aren’t eligible for benefits or deductions like employees.
Here is a sample paycheck with an online paystub maker:
Deductions on Your Paycheck
By the term deductions, we mean the amounts withheld by your employer from your gross pay. These withholdings from your earnings vary based on the earnings bar & are usually deducted for every pay period. Here is the list of deductions mandated for employee tax:
- FICA (Federal Income Tax)
- State income tax
- Local tax
Benefits & Other Deductions
The deductions from the paycheck are not for taxes, but also indicate certain benefits like insurance premiums, retirement plans, charitable donations, etc. These amounts are deducted from your paycheck & reflected with the paystub generator. But, they’re ultimately benefitting the employee. So, they’re classified as deductions for benefit.
Are You Paying Too Much or Less Tax?
If you’re an employee, here’s your takeaway! File a W-4 form accurately for your employer to withhold correct amounts as federal income tax from your pay. If they’re withholding little than the recommended limits then you’ll owe a penalty to the government. On the other hand, if they’re paying more than they should then a refund is due.
In a nutshell, an employee holds a responsibility to determine whether the employer is paying taxes -properly or not. Thus, W-4 Form should be filled as a declaration to the employers regarding the taxes they would withhold. It is usually filled at the beginning of a new job.
Check Stub Maker
Helping You Get Sorted with Tax SeasonEmployers, as well as freelancers, can make the most out of the tax season with a check stub maker. Besides being able to create paystubs online, it is an efficient tool to get sorted with taxes in no time. Moreover, you don’t have to wait until the tax season to file your taxes or figure out the amounts you have to pay as tax.
Also Read- Tax Benefits of Home Ownership