Posted by
Viventium
| July 14, 2021
I’m sure we can all remember receiving our first paycheck and thinking, “I don’t even know what all of these taxes are and where this money is going.” Chances are, if you worked outside of the world of home care, your paycheck was probably pretty simple and you were able to figure it out over time:
gross – taxes – deductions = net pay is the payroll equation we all became familiar with. Soon enough, we would be cashing our checks without even bothering to look at our paystubs again – provided the net looked right each pay period. Today, home care agencies need to focus some more time and effort on pay transparency. First of all, companies like Amazon and Walmart have boosted their minimum wages to
$15 an hour, and home care agencies may find that they’re losing caregivers to other industries, not just to other agencies. With all of the competition for talent, it has become critical to not only have competitive wages but to also have an open line of communication about pay and how it’s calculated. That is where the power of the paystub comes in. Reading a caregiver paystub, however, can be daunting and confusing. So, here’s a quick rundown of all those big terms that show up on each and every paystub that you can make your caregivers aware of:
Gross Pay The total amount of money earned before deductions are taken from the check. Usually, this number will not be the same as the amount on the paycheck.
Net Pay The amount of money taken home after Uncle Sam takes his cut, Social Security and Medicare contributions have been made, and other withholdings are taken.
Social Security Taxes Contributes to coverage of the Social Security system. The Social Security rate is 6.20% for 2021, and all employers contribute another 6.20% on behalf of the employee.
Medicare Taxes Similar to Social Security taxes and are mandatory. The rate of Medicare withholdings is 1.45%, and all employers contribute another 1.45% on behalf of the employee.
Federal Income Taxes Determined by the information provided on the W-4 when the employee is first hired. This amount approximates what is owed to the Federal government when it is time to file income taxes and is taken incrementally from each paycheck.
State/Local Income Taxes Varies from state to state as well as some localities. The amount is also deducted from the paycheck in the same way Federal taxes are to cover the amount of taxes owed to the state/municipality come tax season.
Time Off Leave time includes vacation days, PTO (paid time off), or sick days. This will include how many hours have been used to date and how many hours remain for the year.
ACA/Insurance Taken from the paycheck depending on the type of health and/or life insurance that is offered. This deduction varies based on the type of plan.
Retirement Contributions Those such as 401(k)s or 403(b)s show the amount contributed to either of these deferred compensation plans.
Expense Reimbursements This is a big one, especially for caregivers – they would like to see that they are being reimbursed for company expenses or if they are being reimbursed for travel. These are other common abbreviations on the paystubs:
This information is for educational purposes only, and not to provide specific legal advice. This may not reflect the most recent developments in the law and may not be applicable to a particular situation or jurisdiction.
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- YTD: Year-to-Date
- FIT or FWT: Federal Tax Withheld
- SIT or SWT: State Tax Withheld
- SS or SSWT: Social Security Tax Withheld
- MT or Medi: Medicare Tax Withheld
This information is for educational purposes only, and not to provide specific legal advice. This may not reflect the most recent developments in the law and may not be applicable to a particular situation or jurisdiction.