#16 – Understanding your pay stub | Dental Practice Coaching

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#16 – Understanding your pay stub

You’ve worked hard and it’s time for your first pay check! We pay you ________ /month. The pay period closes, the number of hours you worked are totaled from your time clock logins and the resulting number is relayed to our payroll processing company.  Two days later your money will be directly deposited into your checking or savings account, whichever you chose.  You will be given the entire year’s pay deposit schedule so you’ll know the date your money will be deposited in your account.  (Sometimes the payroll will occur on an unusual day due to holidays.) You also will be given a copy of your paystub.

Here’s how to read your pay receipt:

Payroll deductions:

    1. Taxes – mandatory, based on the tax status  (single, dependents) you chose
    2. FITWH – Federal Income Tax withheld

The amount is determined by:

  • Marital status
  • File separately or jointly w/ your spouse
  • Number of exemptions you claim (the fewer the exemptions claimed, the higher the withholding amount)

MED and SOC (Social Security and Medicare Tax withheld) – Everyone pays 6.2%(for social security tax FICA) of your total taxable income, up to $102,000 in 2008 and 1.45%(for Medicare tax) on all income with no upper limit

OH – State Income Tax for Ohio- similar to federal income tax, except goes to the state

OHTIP – City Income Tax forTippCity– 1.25% of your total taxable income

  1. Other taxes:  if the city you live in has a city income tax, you will also see this listed beginning w/ OH – then a three letter abbreviation for the city.  If the school district you live in has a school district income tax, you will also see this listed beginning w/ OH – then a three letter abbreviation for the school district
  2. Practice payroll taxes:  Our practice also pays taxes on your income, but it doesn’t show on your pay stub
  • FICA – 6.2% of your taxable earnings up to $102,000 in 2008,-same as you pay
  • Medicare – 1.45%(for Medicare tax) on all income with no upper limit
  • Federal Unemployment Tax Act(FUTA)- .8% of the first $7,000 of your gross earnings
  • State Unemployment Tax Act- This rate varies with how many claims we’ve had.  The fewer the claims, the lower the rate.  (2008 rate is .5% of the first $9,000 of your gross earnings)
  • BWC – workers’ compensation – a certain % of your pay is paid for this coverage

CityTaxes – Our city taxes all individuals 1.25% if all income earned in the City.  Your city of residence may also have and income tax.  If their tax is higher than ours, they will give you credit for the tax amount paid, and you will only have to pay the difference to your local city.

Voluntary deductions (deducted from your gross pay) – pre- tax deductions (deducted from your gross pay before your taxes are calculated, so you pay less in taxes)

  • 401K retirement plan contributions
  • Flex plan/Section 125C (cafeteria plan) – see policy manual for all these possibilities!

after tax deductions -voluntary deductions to your savings account                         ­­

_______________________________                       ___________________ Dentist                                                                                              Date