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In this lecture, payroll deductions are defined according to fundamental accounting principles. Payroll deductions are amounts withheld from an employee's gross pay, commonly referred to as withholdings. These typically include payroll taxes such as federal income tax and FICA taxes, which encompass Social Security and Medicare. Additionally, deductions may include contributions to benefits like retirement plans and insurance plans. The process involves taking the gross pay—what employees actually earn—and subtracting these deductions, resulting in the net pay the employee will receive. The key components of these deductions include federal taxes such as FICA and federal income tax on wages.