Multiple Choice
Which of the following is a mandatory deduction from an employee's pay in the United States?
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9. Current Liabilities
Payroll and Payroll Taxes
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Which deduction from your paystub is typically paid back to you at a later date?
A
Employee loan repayment
B
Social Security tax
C
Federal income tax withholding
D
Medicare tax
Verified step by step guidance1
Understand the nature of deductions on a paystub. Deductions are amounts taken out of an employee's gross pay for various purposes, such as taxes, benefits, or repayments.
Identify the types of deductions listed in the problem: Employee loan repayment, Social Security tax, Federal income tax withholding, and Medicare tax.
Analyze each deduction: Employee loan repayment is a repayment of a loan provided by the employer, which is typically paid back to the employee or credited once the loan is fully repaid. Taxes like Social Security, Federal income tax withholding, and Medicare tax are mandatory contributions and are not directly reimbursed to the employee.
Focus on the deduction that involves repayment. Employee loan repayment is unique because it represents a financial obligation that the employee repays over time, and once the loan is repaid, the employee no longer owes this amount.
Conclude that the deduction typically paid back to the employee at a later date is the Employee loan repayment, as it is a repayment of borrowed funds rather than a tax or mandatory contribution.
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