When you get a legal job in US, you will receive pay check. When you get paid, you will receive a  pay stub.

A pay stub, is a document that lists the gross income and all taxes and any other deductions such as retirement plan contributions, insurances, garnishments, or charitable contributions taken out of the gross pay. It will list your final net pay that will be sent to you( direct deposit or check).

We will look at sample pay stub and go over various taxes that are deducted from your gross salary and voluntary deductions. Pay stub is also referred as Pay statement, pay check stub, payroll statement.

Sample Pay Stub

adp pay stub sample
If you are working in USA (H1B, OPT, CPT, L1 or L2 Visa, part time jobs) you will have to pay taxes as per US tax laws.

Following image is a sample pay stub from ADP (payroll provider). Click on the pay stub/tax image to expand.

Payroll Tax Deductions

Following taxes have to be withheld from an employee’s paycheck. This is mandatory and required by law. Usually, employers will hire third party companies like ADP to handle payroll processing.  Payroll tax deductions include the following

  • Federal income tax withholding
  • FICA Taxes
    • Social Security tax withholding
    • Medicare tax withholding
  • State income tax withholding
  • Other taxes (city, county, etc)

Social Security Tax equates to 6.2% and Medicare taxes is 1.45%

Voluntary Payroll Deductions

Voluntary payroll deductions (listed as Others in above sample) are withheld from  paycheck only if the employee has agreed to certain deductions. Voluntary payroll deductions include the following:

  • Health insurance (medical, dental, and eyecare)
  • Life insurance
  • 401k
  • Employee stock purchase plans (ESPP )
  • Others

Voluntary deductions can be from pre-tax dollars or after-tax from Gross.

Tax Savings

  • If you live and work in states like Texas, Florida, Alaska, South Dakota, Wyoming, Washington doesn’t have State Income tax. Which means Any State Income tax deduction (43.68) will not deducted, which will be additional savings for you.
  • If you live in New York City, then you will pay, high federal tax, state tax and then city taxes. Which will lower your income, but usually taxes are compensated by higher salary. Higher salary doesn’t always mean more savings. You have take cost of living into account.
  • If you are in OPT, CPT you are not required to pay Social Security and Medicare Taxes (FICA Taxes)

Hope this article gave an overview about pay stub and if you have questions about taxes, 401k or other deductions, leave a comment.

I’m not a tax expert, but I will try to respond to your questions, if I know the answer. 2 things are certain in life – Taxes and Death.

FICA Taxes OPT, CPT

Students in F1 Visa and working using CPT or OPT are not required to pat FICA taxes. That’s 6.2% (Social Security) + Medicare taxes is 1.45% in savings.

 

Comments

  1. Hi,

    I am on OPT and for the temporary position I had in the fall no federal tax was withheld but I got charged for Medicare and social security. So I understand I do owe federal tax but can I get social security and medicare back.

    Thanks,

  2. I am offered a contract job and the pay is on per hour basis. So if I don't work for a month I do not get paid. But somewhere I read regardless of whether you work or not the employer needs to pay you the salary. So if I don't work for a month and the employer doesn't pay then can I file a legal case against him?

    Also what is the difference between W-2, 1099, corp2corp, etc ? Which one is best?

    And if I am on W-2 then the employer has to give paid leaves? Is it mandatory?

  3. Hi,

    The post is of great use. I appreciate your work on this. I have a query regarding payroll charges for a H1B holder. Do you have any idea on the monthly payroll that should be paid if a H1B holder is free without holding a job. Also, is it allowed to stay in US without job for few months and without paying any payroll. Please clarify.

    Thanks,

    Nagamani

  4. Hi HSB,

    It was a very useful post. This helps us alot in understanding the tax plan in US. Keep up the good work.

  5. Hello,
    I have offered a job in Ny, for 45000/annuam. Heard it is little less . How much i need to spend as taxes and all. Please guide me.

  6. Hi,

    The article is very good. It gives clear idea on pay stubs and taxes.
    Thank you for posting the article.

    Regards,
    AK

Comments are closed.