19 Where did my money go? Payroll deductions are the amounts withheld from your paycheck by your employer. While taxes will account for most, if not all, of your deductions, additional deductions may be taken for retirement, insurance, etc. Here are four major deductions you are likely to see on your pay stub. FICA Social Security Tax and FICA Medicare Tax Federal Insurance Contributions Act (FICA) tax is a U.S. federal payroll tax imposed on both employees and employers to fund Social Security and Medicare (federal programs that provide benefits for retirees, the disabled, and the children of deceased workers). Social Security and Medicare are the nation’s two largest entitlement pro- grams, accounting for 1/3 of the federal budget. You chip in 6.2% of your gross income for Social Security and 1.45% for Medicare. Your employer chips in the same. Federal Tax This portion of your salary goes to the federal government to fund a budget that exceeds $4 trillion per year. That money is distributed among health programs, the military, unemployment programs, veteran’s benefits, and so forth. State Tax State tax deductions depend upon the state in which you live and whether you work part- or full-time. What is a W-2? The IRS requires employers to report your wage and salary information to them on Form W-2. Your employer must also send you a W-2 by January 31. (This will be a summary of your pay stubs from the previous year.) You need the information on your W-2 to complete your tax return, which is due April 15. Most parents of students list their children as “dependents” on their tax return. This allows them to claim a dependency exemption of around $4,000. So, do you need to file a separate tax return if you had a job? Like most tax-related matters, the answer is too complicated to explain here. To answer this question, you and your parents should consult with a qualified tax preparation specialist.