How to decipher those strange codes on your paycheck

Are you getting less money in your paycheck than you should?

Most workers opt for receiving their cash via direct deposit these days from their employers because it’s convenient and secure.

But taking your pay this way could mean you’re not getting the right amount.

“Every year tax laws change. Payroll departments rely on software programs to stay current and there could be errors along the way,” said Sam Kerch, director of finance at Symmetry Software, which develops tools used by many of the largest payroll processors.

“You want to make sure the change that happens on your check is expected.”

The only way to know if you’re being paid correctly is by looking at something you may not have seen in a while — your complete pay stub.

Review federal withholdings

Federal income taxes are usually the first to be listed and come out of every paycheck.

“Everybody is going to see some kind of federal taxation — at the least Social Security and Medicare,” said Kerch.

If it’s not entirely written out, look for a line that says FED, FIT, or FITW, representing federal income tax withheld. Social Security taxes are often abbreviated as SS, SOCSEC or OASDI, according to Kerch.

You want to make sure there are no zeros next to those lines and that money is being taken out in consistent amounts for each of these items.

If your personal situation, including marital status and income, have stayed mostly the same, compare the amounts being taken out with pay stubs from the prior year and look for significant differences. That can be a sign that something is wrong.

Make sure the correct state is listed

If you live in a state that collects income taxes, that line may appear as SIT or SITW — which roughly stands for state income tax withholding.

If you’ve relocated but stayed with the same company it’s very important to check that your taxes are being paid to the state you currently live in.

“Lots of times someone will move between states but never tell payroll,” said Kerch.

He says often workers realize their withholdings were going to their old state, or worse, stopped altogether once they receive their annual W-2. That can be a very costly mistake when it comes time to file.

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Check deductions

Not all deductions are problematic. Some help you build your financial future and save money on taxes.

This list includes money you’re contributing to your company’s retirement savings account, which is most often listed as a 401(k).

Other types of pretax deductions, where the money is taken out before federal or state income taxes are applied, include payments toward your health insurance if you’re using your employer’s plan.

You may also see the abbreviations FSA or HSA on your list. They stand for flexible spending account and health savings account. These are tax-advantaged savings accounts for medical expenses — most often you choose an annual amount to contribute during your company’s open enrollment period.

If you’re unsure how much should be taken out for these accounts, call your human resources department, or check your company’s benefits website. From there, find your annual election amounts and make sure your payroll deductions are accurate.

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