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 taximposedonbothemployeesandemployerstofundSocialSecurity and Medicare (federal programs that provide benefits for retirees, the disabled, and others). You chip in 6.2% of your gross income for Social Security and 1.45% for Medicare. Your employer chips in the same. Theseprogramswillbenefityoupersonallybyprovidingyouwithincome (Social Security) and health care (Medicare) when you retire. Federal Tax This portion of your salary goes to the federal government to fund a budget that exceeds $4 trillion per year. Federal tax dollars are used to pay for education, defense, roads and highways, veteran’s benefits, and much more. State and Local Taxes The amount of these tax deductions depends on the city and state in which you work. What is a W-4? When you get a new job, you must complete a W-4 to let your employer know how much money to withhold from your paycheck for federal taxes. Completing your W-4 accurately can keep you from having a big balance due at tax time, or from overpaying your taxes. 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.