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Payroll Codes. If paycheck stubs look like they are written in code, it’s because they are. They are written in payroll code with all sorts of acronyms and abbreviations for different types of earnings and deductions . Payroll codes can differ slightly from employer to employer, but here are some common ones you are likely to see on your paycheck stub. These will help you decipher the information:
Gross – Total earnings before deductions for taxes or benefits Net – Earnings after deductions Current – Earnings in this pay period YTD – Year-To-Date REG – regular hours worked OT – overtime hours worked VAC – vacation time paid SICK or FL – sick or family leave time paid FICA – Social Security paid by employee
FICA-MED – Medicare deductions Fed – Withholding for Federal Income Tax SWT or State – Withholding for State Tax OASDI – Old Age Survivors and Disability Insurance; Social Security LT or Local Tax – County and/or City Tax deductions WC or Work Comp – Worker’s Compensation contribution, usually paid by employer
INS or MED – insurance or medical savings account deductions
Life – Deduction for life insurance 401K or Ret – contribution to tax retirement account Garnish – garnishment; money taken from employee’s check due to debt collection or judgment COLA – Cost of Living Adjustment
By the time your paycheck gets to you, many bites have been taken out of it to pay for income taxes and your share of the cost of employee benefits. Federal, state, and local taxes are paid via withholding. The goal of withholding is for the employee to pay their annual income taxes in increments to avoid a big tax bill at the end of the tax year. Employees are responsible for paying a percentage of the cost of some of their benefits which is done through deductions. Some deductions are made before income taxes are withheld, which has the added benefit of reducing the employee’s taxable income. When you begin earning a paycheck, consult an expert such as an accountant or financial planner so you can make informed decisions about taxes, withholding, deductions, and benefits. PRODUCT PREVIEW
THE BIG PICTURE
PONDER AND PREDICT These days, many companies are multinational, meaning they are headquartered in one country with branches and offices in another or several other countries. GenZ is highly globally mobile, so it’s quite possible that one day you will pursue a career overseas. What’s it like to work overseas? What opportunities are there and how can you find them? What are the challenges of working overseas?
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THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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