How To Read Pay Stub Deduction Codes?

Many people don't often look at their pay stubs. They either get a physical paycheck or get paid through direct deposit and that's that. But at some point, you'll need to evaluate your pay stub deduction codes and this may present a problem. 
Pay stubs are important records of income, tax and deduction information. Some people rely on them to keep track of their monthly and yearly budget. Others don't pay attention to them unless it's tax season or they need them for things like loan applications or rental agreements. 
It's very important that you understand and stay informed about your pay stubs. You're responsible for getting any mistakes corrected. If you don't, you could risk having incorrect amounts taken out of each check without even knowing it.
But if you're not used to evaluating your pay stub, it can be quite confusing. Pay stubs include a number of earning and deduction codes. If you're not familiar with them, translating your stub could be aggravating.

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

• FED TAX - Federal Income Tax Withheld
• STATE TX - State Income Tax Withheld
• MEDICARE - Federal Medicare Withheld
• ERA - Educational Retirement Act Contributions
• FICA - Employees portion of paid Social Security
• INS / MED - Insurance or medical savings deductions
• SWT or FED - Federal withholding income tax deductions
• LIFE - Life insurance deductions
• GROSS - Earning prior to deductions
• SS or SSWT - Social Security or Social Security Tax Withheld
• YTD - This is the year-to-date code

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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