Involuntary deductions on a paycheck are payroll deductions that must be taken out of an employee’s pay. These deductions can include:
- Mandatory, state, local, and federal income taxes including FICA;
- Child support payments;
- Defaulted student loans; and
- Tax levies.
What are voluntary deductions then?
Voluntary deductions on a paycheck are payroll deductions that the employee has chosen to have taken out of their pay.
As shown on the sample paycheck below, these can include:
- Pre-Tax Deductions and Contributions such as retirement funds, health insurance and commuter benefits.
- Post-Tax Deductions and Contributions such as charitable donations; retirement funds that are post-tax, like a ROTH 401(k); and contributions to 529 college savings plans.
Withholding and filing requirements can be tricky for employers and employees , so it’s best to work with a CPA or payroll provider to ensure your payroll deductions are handled correctly.