Statutory deductions are deductions mandated by federal and state laws that require employers to withhold a portion of the amount from employee's paychecks and pay to the government. These deductions are what employees owe and differ from voluntary deductions such as retirement savings or benefit plans.
Examples of statutory deductions are federal and state income taxes that the employers compute based on the employee's gross wages and the number of dependents. Higher the gross pay and lesser the number of dependents, higher will be the withholding amount. Employees have to complete Form W-4 to calculate the federal withholding amount. Other examples are Medicare and Social Security taxes and child support deductions.
In 123PayStubs, we provide an add-on to calculate and include employees' federal and state withholdings on the pay stubs.
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