A Paycheck is a Paycheck is a Paycheck, Right? Wrong!

Are Health Insurance Premiums Pre-tax - A Paycheck is a Paycheck is a Paycheck, Right? Wrong!

Good afternoon. Now, I found out about Are Health Insurance Premiums Pre-tax - A Paycheck is a Paycheck is a Paycheck, Right? Wrong!. Which could be very helpful to me therefore you. A Paycheck is a Paycheck is a Paycheck, Right? Wrong!

Ok so you get a paycheck. It is mailed to you, sent by email or handed to you by your arch-nemesis (your supervisor). Or maybe you are the someone handing them out. Whether way, the scenario is the same. You have in your hand or inbox a document showing you what you were paid. And to some, quite mysteriously, there is money taken out of your earnings and given to the government, or whoever, and it reduces the whole that you have to shop, save, or pay bills with. It could happen to you every week, every other week or each month. And you take that money that is left over and do with it anyone you chose. So why should you care where the extra money goes? It's gone, right?

What I said. It isn't in conclusion that the actual about Are Health Insurance Premiums Pre-tax. You look at this article for home elevators what you wish to know is Are Health Insurance Premiums Pre-tax.

Are Health Insurance Premiums Pre-tax

But here is the thing....where did it go? Did it go in the right amount? How does it sway you? Your spending habits, your budget, and the way you save for the future? It's gone, right? So who cares where it went, it's not coming to you, right? Wrong!

I'm not going to be one of these people to tell you that you can't afford things, or will ring bells and make funny noises to indicate that something to do with your finances should be prominent to you. But I will tell you this - it's your money and you need to know where it goes and why.

Now, most of us are savvier about money than say our mothers. (Sorry Mom!) Or we think we are. I was recently working with my mom going straight through her financial paperwork and was surprised about the things I take for granted as base knowledge that she was not aware of. She is a smart woman, so I was a little surprised. So we might be ahead of our Mother's generation in terms of being more financially independent, but ask yourself, where does the money that comes out of your paycheck go? Do you know? Do you know what all of those fancy little acronyms mean? And why should you care?

First: the paycheck. And yes, we are going to go straight through it line by line. But I promise it won't be torture. We'll make it quick and then talk about why you should look at this every pay period and how it affects you.

So, what should you look at when you receive your pay stub? You may not like my answer, but the reply is everything. Let me ask you a question. If you lost 1.63 from your wallet would you care? Would you look for that money? Be honest with yourself, would you panic? Now I am not saying that you have lost this 1.63 from your pay, but if you don't know what it is or where it goes, it is as good as lost.

So now for the fun! Let's go straight through this pay stub line by line so that you can understand what you are being paid and where those deductions end up.

The first box is Emp#. This is your worker whole that is assigned straight through payroll. This one does not have relevance unless your Hr department asks you to supply this to them as a disposition part of how they recognize you before speaking with you about a problem or question with your pay.

The next box is enterprise Name. It is prominent for you to know what the legal name of the enterprise you work for is if you have an issue or a problem. An example of an issue or a problem that would be affected by you knowing your company's legal name would be if you needed to apply for Worker's compensation or Unemployment. Again, why? Because these agencies refer to the enterprise you work for by their legal name. If you do the same you will avoid obscuring when dealing with them.

The next box is period End date. This box is prominent to check because it states the period for which you are being paid. You may ask yourself, who cares? The reply is -you should. Does the whole being paid agree with the period that you worked for? In our scenario we have a salaried personel but if you were being paid by the hour, how can you know you have been paid for the hours you worked unless you know what period your manager is paying those hours for?

The next box is Dept#. Even I will admit that this one is not too prominent unless your manager deducts things from your pay for working in a definite department. For instance, in restaurants employers may deduct an whole from your pay for uniform maintenance or you might have a deduction from your pay if a department in that restaurant is allowed to eat lunch while working and the manager deducts a flat whole for food costs.

Our next box is the strangeness box! It says Fw =M 01. Is it an algebraic formula? Is it something Einstein invented? No, this is authentically an prominent box! The Fw stands for Federal Withholding. The M stands for Married and the 01 is the whole of dependents that is being claimed on form W4. This box drives what comes out of your pay for Federal Withholding and can determine the all prominent game of Whether or not you receive a repayment after filing your yearly tax return or Whether you will have to send money into the Irs.

What is prominent to know about this is that the Federal Withholding taken from your pay each pay period is based on a tax table. So the way this calculates is any payroll ideas will look at your gross pay, the frequency you are paid (weekly, every two weeks, etc.), and what you claimed on your W4 to see how much tax to take from your check.

The tax table calculates based first on Whether you are claiming the status of single or Married and then on the whole of allowances you have claimed, in our case 01. The general rule of thumb is that single claiming 00 allowances takes the maximum tax and Married with more allowances takes less and less tax. We will get supplementary into this in the why you should care measure of this article.

Our next box Ss# xxx-xx-0123 again looks something we learned in high school algebra. It's not. It is your communal safety number. What do you need to know about this? You need to know that this is the way it should look on your check stub. Or it could look like: ***-**-0123. Or it could be all exes or all *s. What you should Never see on your check stub is your full communal safety whole printed out.

Our next box is your name and address. This one is only of concern to make sure that it is correct. Sounds simple. Make sure it stays simple. Your enterprise may have different policies of how they get information to you. Most will mail at least your W2 form directly to you at the end of each year. So make sure your information is current so that there is no disruption to you receiving prominent tax information. If you move, alert the suitable someone in your enterprise as soon as possible so that they can get your payroll records updated.

Under your name and address are two boxes: check # and net pay. The check whole is not something that you need to look at. It is the check whole assigned by your company. If you misplace a check or need to speak to someone concerning your check they can look up the information they need in their records. The net pay is the whole of pay that you will take home after taxes and deductions have been taken from your pay.

Our next box is the earnings box. Stay with me here we are getting to the good stuff! This box tells you how much you are being paid before taxes and other items are deducted from your pay. In this pay stub we have a wage whole (Sal1). However, if you are paid by the hour, you will want to make sure the hours you told your manager you worked and the hours on your pay stub match. Mistakes can happen in processing payroll, they are not intentional. It is your responsibility to check your pay stub and let your manager know if there was an error in reporting your hours to the payroll company.

Other types of earnings may contain commissions, bonuses, and even reimbursements for telephone usage, mileage or office supplies purchased.

The next box is labeled taxes. We are going to go straight through each item in this box to elaborate the different payroll taxes.

- Fwh = Federal Withholding. We gave the example of this above when looking at the Ss# box. This is your Federal earnings Tax being withheld from your pay each payroll period.
- Fica = This tax is the Federal guarnatee contribution Act tax. It is taken at a flat division of 6.2% up to an yearly earnings cap. These taxes are taken to supply a range of benefits to qualifying workers and their families straight through the program known as communal security.
- Medfica = This tax falls under the Federal guarnatee contribution Act and allows an supplementary 1.45% of your pay to be withheld for Medicare, which provides condition guarnatee for qualifying disabled workers and people 65 years of age and older. There is no earnings cap with this tax.
- St = State Withholding. Here in Pennsylvania this is a flat division tax. However, in many states the withholding works much like the Federal Withholding tax. It is based on what you claim on your state W4 form. Again the principle is the same, the tax table calculates based first on Whether you are claiming the status of single or Married and then on the whole of allowances you have claimed, in our case 01. The general rule of thumb is that single claiming 00 allowances takes the maximum tax and Married with more allowances takes less and less tax.
- Wchpa = This is the local tax where my enterprise in this example is located. In Pennsylvania there are thousands of local taxes. They range from.5% to the Philadelphia wage tax that exceeds 3%. The tax is based on where you are employed and not where you live. The next state close to Pennsylvania in the whole of local taxes is Ohio. Many from this area would be surprised to know that many states have no local taxes.
- Pa Unem = This tax is the Pennsylvania worker share of unemployment. This tax can come and go. In times of high unemployment percentages the State deducts this tax from employees to help offset the cost of the payment of unemployment to those who do not have work. Other states have similar taxes and some also have employees conduce to disability and state paid condition care.

Next is our deductions box. There are two deductions here as an example of what you could expect to see.

The first deduction is labeled Med125. Med125 refers to curative guarnatee premiums that are deducted from your pay and that are run straight through a Section 125 plan as defined by the Irs. What does this mean to you? If you have a condition guarnatee prime deducted from your pay there are two ways to do it. One is a suitable deduction that comes out of your pay after all of the taxes have been deducted. The other is straight through a Section 125 plan. If your enterprise has an established 125 plan then your condition guarnatee deduction comes out of your pay before taxes and is not subject to payroll taxes. If you are not sure what your enterprise offers ask someone in your Hr department. Using a Section 125 plan saves employees the cost of paying taxes on their condition guarnatee contribution deductions.

The next deduction is labeled Lst. This is the Local Services Tax for Pennsylvania. The local services tax is a tax that is deducted from your pay up to a maximum of .00 per year. It is collected on a pro-rata basis that is thought about by the whole of payroll periods established by an manager for a calendar year. This tax is used to help offset the cost of urgency services and also is used to sell out asset taxes straight through homestead acts in sure municipalities.

Our final pay check stub box is Year to Date. Ok, we are roughly done here! This is just a total of what has been paid to you and what has been deducted from your pay for the year.

So, now the all prominent part of this exercise. Why should you care about all of this and how does it sway you?

Well, to start this is your money. And yes it is prominent to know where it goes. This is authentically not the day and age where a woman is kept in the dark and her husband takes care of all of the financial responsibilities while the woman takes care of the house and children. Most families are made up of two working parents. For most it is a necessity to meet the rising cost of food, fuel and condition guarnatee and it is not an option for many mothers to stay at home. It is also unfortunate that the disunion rate in our country continues to rise but it also means that women, like it or not, are roughly forced to be financially savvy. So let's get started on the importance of understand how your money comes and goes straight through a paycheck and why you should care.

You earn an whole from your employer. You submit a time sheet or some type of data to your manager letting them know what work you have closed or the hours that you have worked. They take that data and process it straight through payroll. You then receive a net whole and it is direct deposited in your bank or you take a check to the bank and deposit it each pay day. We have established that there are taxes and deductions taken from your pay and you get what is left over. Now here is why it matters.

Unlike the favorite concept that taxes and deductions are taken from your pay and there is not much you can do about it, there are portions of your pay that you can directly control to put more money in your pocket now!

We are going to reference back to those pay check boxes again and go straight through the portions of those taxes and deductions that you have control over. I know what you are thinking! Not the boxes again, but bear with me. There will be strategies to help you put money into your family's hands. It will be up to you to determine what strategies to use and what your ease level will be with their affect.

So let's get started.

Ok, the first thing you should take a serious look at is your Federal Withholding. Let me ask you a question; are you one of those folks that get a huge repayment when you send in your Federal tax return? If you are, you might want to think about what you are doing. By allowing the federal government the use of your money throughout the year you are missing opportunities. Do you have reputation card debt? Is the reputation card enterprise charging you interest on your outstanding balance? Then why "loan" the Irs your earnings when you have debt to pay? Yes you get a big repayment at tax time, but what if you had use of that money throughout the year? What would you do with it? Could you pay down debt? spend it? If you spend this money, even in a money market inventory you could be earning money with these funds instead of allowing the federal government to use it and then pay it back to you later.

You have to be truthful with this one. Think about your ease level. Are you comfortable using that money throughout the year or do you have a need to get this all in one lump sum? If you are not a disciplined saver then that lump sum return of your money might be piquant to you. You also have to make sure that if you determine to take that money now that you check with your accountant or with an online paycheck calculator at the very least to make sure you don't sell out your Federal Withholding too much and end up owing money at the end of the year. That will authentically not help you perform your personal financial goals, not to mention the Irs frowns upon you owing them money. Ironic, isn't it?

There is an additional one item on your paycheck that is prominent and can keep money in your pocket - it is your communal safety number. When we went straight through the personel boxes on our check stub I stated that you should Never see your entire communal safety whole on your check stub. Instead, the whole should be masked by stars or exes. Why? Because identity theft is a real threat in our society. So if your paycheck is lost in the mail, that is bad enough, but if your communal safety whole is on it you are just asking for trouble. Check your newest check stub. If you see your communal safety whole on your check taste your payroll administrator right away and they can have that whole masked. It should be suitable custom with payroll providers, but some are not paying attention to those trends that can sway the end user, namely, you.

Another item that can save you significant money is that Med125 deduction. A lot of fellowships have their employees pay a measure of the cost of condition insurance. With the addition cost of condition premiums it has come to be a necessity for most companies. But how can you paying toward your condition guarnatee save you money? Remember this condition guarnatee deduction is taken from your pay and is not taxed.

You cannot assume that if you have a condition guarnatee deduction that it falls under a Section 125 plan. You have to ask your manager if they have this plan. If they don't you could ask them to investigate one. In the past it was a headache for fellowships to allege a 125 plan. But now a plan that only contains condition guarnatee premiums or a prime only plan has little executive headache to it if your part of a enterprise with under 99 employees.

Also, an additional one way to save money straight through payroll is to ask your Hr or payroll taste if your enterprise has a Full Flex Plan as part of their 125 plan. What does this mean? A Full Flex Plan or A Flexible Spending inventory as a part of a 125 plan gives you a great opening to save money. It allows you to have a predetermined whole withheld from your pay each year to pay for assorted curative needs. If you are having optional surgery, it could be run straight through the Flex inventory at your work, so you don't pay tax on that amount. Many Flex accounts have a list of items that you could put this money toward, such as, taste solution, sure over the counter medications, and even nicotine patches are reimbursable. The thing to watch with Flexible Spending Accounts is that they are what is called "use them or lose them". So if you have 00.00 deducted from your pay each year, but only submit reimbursements for 0.00 then you lose the 00.00 you contributed. Check with your Hr or payroll administrator to find out the rules to your company's Flexible Spending Account.

Another expense that you could be running straight through payroll using your company's Section 125 plan is Dependent Care. So if you have children that go to a day care installation while the week the whole that you pay to the day care could be run straight through your pay check and be deducted from you untaxed.

So to summarize this Section 125 plan, when these items are run straight through your paycheck on a pre-tax basis (meaning the amounts deducted from you are not taxable) you in consequent save roughly an self-operating 12-15% on condition insurance, curative necessities, and child care. authentically think about that statement. If you child's day care asked you if you wanted to save 15% on their fees, would you look into? If a pharmacy offered you savings of 15% off of all purchases would you go to there? This is like an self-operating paycheck coupon to save your family money.

My final hint is what is missing from our check stub. There is no 401(k) or easy Ira deduction on our stub. These are savings for resignation accounts that are taken from your pay and are not subject to Federal Withholding. If your enterprise offers one of these options look into it. 401(k) plans are run according to the way your enterprise sets them up, so the rules are not standardized. However, many fellowships offer what is called an manager match for deductions that you make into this type of resignation account. If your enterprise does offer a match then this is instant earnings on your contributions. easy Ira plans need an manager match so you are guaranteed to have an immediate return on your investment.

Consider thought about before you determine that you are not going to share in one of these plans. If you put aside even a small whole I would investment to say that you are not going to miss that money on a per pay basis and it will go to securing you financial relaxation when you retire.

So now your paycheck should not just be a piece of paper to you. The strangeness of what is taken out and why has been explained. I would challenge you to think about some of these strategies for putting money back into your pocket to see how you can save your family money straight through payroll. Of course, everyone's financial situation is different, so reveal these strategies with your financial pro before implementing them.

I would also challenge you to look at your pay stub each pay period. The more you look at it the more customary you come to be with it and you will start to know what to expect. When you know what to expect then you will get a feel for what you are paid, when you are paid and how you are paid. Knowledge is one of the first steps toward becoming more financially savvy.

I hope you will get new knowledge about Are Health Insurance Premiums Pre-tax. Where you possibly can put to use within your day-to-day life. And most importantly, your reaction is passed about Are Health Insurance Premiums Pre-tax.