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In this lecture, we define payroll deduction based on fundamental accounting principles. According to the 22nd edition of D.A., payroll deductions are amounts withheld from an employee's gross pay, also referred to as withholdings. While payroll taxes typically include federal income tax and FICA taxes (Social Security and Medicare), deductions can also cover benefits such as retirement plans and insurance plans. The process involves starting with the gross pay, from which deductions are taken, resulting in the actual amount the employee receives. Key deductions include FICA taxes and federal income tax withheld from the employee's wages.