Final answer:
FICA SS TAX and 401(k) on an earning statement are deductions from an employee's wage, set aside for Social Security, Medicare, and retirement savings.
Step-by-step explanation:
FICA SS TAX and 401(k) on an earning statement are considered deductions.
FICA stands for the Federal Insurance Contributions Act, which includes taxes for Social Security (6.2% of gross income) and Medicare (1.45% of gross income). These deductions are taken out of an employee's gross earnings to contribute towards their future retirement and healthcare benefits. Contributions to a 401(k) retirement savings plan are also payroll deductions as they are taken from the employee's income before taxes are applied, thus reducing the individual's taxable income.
These payroll deductions benefit the employee in the long term as part of retirement planning and healthcare coverage in old age. They are not net earnings or income dollars since they represent the portion of salary that is not received directly by the employee but is instead diverted to these government and personal savings programs.