What are the two types of deductions?

What are the two types of deductions?

Tax deductions fall under two categories: standard deductions and itemized deductions.

What are 2 optional payroll deductions?

Examples of voluntary payroll deductions include: Retirement or 401(k) plan contributions. Health insurance premiums for medical, dental and vision plans. Life insurance premiums.

What are the two types of payroll deductions statutory and voluntary?

Employers must pay mandatory deductions, such as federal, state, and local taxes, while employees have the option of voluntary deductions, such as health benefits. Additionally, there can be pre-tax deductions and post-tax deductions, as long as a worker provides written permission.

What are the 2 payroll taxes?

The largest of these social insurance taxes are the two federal payroll taxes, which show up as FICA and MEDFICA on your pay stub.

What are deductions on paycheck?

Payroll deductions are wages withheld from an employee’s total earnings for the purpose of paying taxes, garnishments and benefits, like health insurance. These withholdings constitute the difference between gross pay and net pay and may include: Income tax. Social security tax. Child support payments.

What are tax deductions examples?

Here are some of the most common deductions that taxpayers itemize every year.

1. Property Taxes.
2. Mortgage Interest.
3. State Taxes Paid.
4. Real Estate Expenses.
5. Charitable Contributions.
6. Medical Expenses.
7. Lifetime Learning Credit Education Credits.
8. American Opportunity Tax Education Credit.

What are the three most common types of deductions?

Tax deductions are great for your wallet, reducing your taxes owed by bringing your taxable income down. Deductions can be grouped into three categories: the standard deduction, itemized deductions and above-the-line deductions.

Which types of payroll deductions are considered voluntary?

Some common voluntary payroll deduction plan examples include:

• 401(k) plan, IRA, or other retirement savings plan contributions.
• Medical, dental, or vision health insurance plans.
• Flexible spending account or pre-tax health savings account contributions.
• Life insurance premiums (often sponsored by the employer)

What are examples of payroll taxes?

Some common examples of payroll taxes are Social Security tax, Medicare tax, federal and state unemployment taxes, and local taxes.

What are employer payroll taxes?

The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. Combined, the FICA tax rate is 15.3% of the employees wages.

What are examples of deductions?

Here are some tax deductions that you shouldn’t overlook.

• Sales taxes. You have the option of deducting sales taxes or state income taxes off your federal income tax.
• Health insurance premiums.
• Tax savings for teacher.
• Charitable gifts.
• Paying the babysitter.
• Lifetime learning.
• Unusual business expenses.
• Looking for work.

What are the most common payroll deductions?

Specific examples of each type of payroll deduction include: Pre-tax deductions: Medical and dental benefits, 401 (k) retirement plans (for federal and most state income taxes) and group-term life insurance Mandatory deductions: Federal and state income tax, FICA taxes, and wage garnishments Post-tax deductions: Garnishments, Roth IRA retirement plans and charitable donations

What deductions can be deducted from payroll?

Pre-tax deductions: Medical and dental benefits,401 (k) retirement plans (for federal and most state income taxes) and group-term life insurance

What are the mandatory payroll deductions?

Mandatory Payroll Deductions. The employer is required by law to withhold payroll taxes from an employee’s gross pay prior to issuing a paycheck to comply with government regulations. Employers who fail to follow the law on mandatory deductions are open to lawsuits, fines, and even, going out of business.

How do I calculate my payroll tax deductions?

For wage earners, it is the amount of hours worked times your hourly rate. If you receive a salary, you can take your annual salary and divide it by the number of payrolls for the year to arrive at your gross pay for the period. Your gross pay is used in calculating all of your payroll tax deduction amounts.