Payroll Deductions in Guam

Payroll Deductions in Guam

• Federal and state income taxes, Social Security, and Medicare are common payroll deductions in Guam
• There is no Guam state income tax, but local income taxes may apply based on municipal regulations
• Pre-tax contributions to retirement accounts and health insurance premiums can also be deducted
• Supplemental wages, such as bonuses, are taxed using a percentage method, involving a flat tax rate applied to supplemental earnings

Net Pay Calculation

• Net pay is the actual cash amount an employee receives on their paycheck, after all deductions and taxes are subtracted from gross pay
• Gross pay is the total compensation due to the employee before any deductions
• To calculate net pay, subtract mandatory federal and state taxes, including income tax, Social Security, and Medicare contributions, from gross pay
• Then, subtract any voluntary or mandatory deductions, such as retirement plan contributions, health insurance premiums, and union dues
• Net pay is essential in payroll management, representing the amount of money available to the employee after accounting for all withholdings

Importance of Net Pay

• Understanding how net pay is calculated is crucial for both payroll professionals and employees
• It helps ensure transparency and correctness in the payroll process, enabling employees to verify their paychecks for accuracy
• It fosters trust within the organization

Examples of Deductions

• Federal and state taxes, depending on tax tables and withholding status
• Benefits, such as health insurance and retirement plans, can be pre-tax or post-tax deductions
• Other deductions, including child support, garnishments, or other court-ordered payments

Payroll Record Keeping and Reporting Requirements

• Employers in Guam must comply with both local and federal laws by maintaining accurate records of wages, hours worked, and other employment details
• Records are necessary for the enforcement of labor laws and essential during audits
• Employers must keep records for at least three years, according to the Fair Labor Standards Act (FLSA)
• Records on which wage computations are based, such as time cards and piece work tickets, must be retained for at least two years