There isn’t a worker alive who hasn’t been a little excited by payday. It’s the reward at the end of the workweek or month for showing up every day.
Even if you’re salaried, we all love the thrill of peeking at the check.
Let’s be honest, though—most of us only look at the amount written on the check. All the rest of those numbers, well, it’s easy to skip right over them and miss out on important information.
Read on to learn how reading a pay stub can keep you informed about your pay.
Pay Stub Information
For many workers in today’s world, they barely look at their pay stubs. Their checks are deposited directly into their bank account. They see they have money and that’s that.
However, the federal government does require that employers keep pay stub records for three years. Many states also require employees to have access to pay stub information, either on paper or digitally.
Many companies choose to use a pay stub template to provide information to their employees about their pay.
Even if you aren’t handed a paper copy of a pay stub, it’s still important to know how your earnings are distributed. Where does all your money go?
Here’s a breakdown of what information you can get on your paycheck pay stub.
Basic Information
Every pay stub will include some basic information. It will include your name and address. In many cases, the employer information, like company name and address is also included.
It used to include your social security number. Now most companies use an employee ID number instead. Many companies often also include your job title on the pay stub, although that is not the required information.
Other information here will also include the check number that was used to pay you, even with a direct deposit. It will also include the pay period. These are the dates your pay started and ended on.
It will also include the day you get the check or the money deposited.
Earnings
The earnings section covers anything related to your earnings, the money you are paid for working.
For salary employees, this might mean your annual salary. Then it is broken down to a weekly salary based on a 40-hour workweek.
An hourly employee will list your hourly rate and how many hours you worked during that pay period. It will also list if you have worked any overtime hours during the pay period and what your pay rate is for the overtime hours.
If you get any bonus pay, it would be listed in this section. Many employees also earn commissions, this would be listed in the earning section too.
Somewhere on your pay stub is information that says gross pay and net pay. The gross pay is your pay for that pay period before any money was deducted.
The net pay is your final amount given to you after all taxes, deductions, and contributions have been taken out.
Taxes and Deductions
This part of the pay stub shows the money taken from your gross pay. The amount deducted is based on the information you complete when you do your W-4 form from the IRS with your employer.
You designate whether you will file single or married and how many dependents you have. This tells your employer how many taxes to deduct based on those designations.
You will pay taxes for:
- Federal income tax
- State taxes
- FICA ( Social Security and Medicare mandatory deductions)
Depending on your individual benefits, you may have money deducted for child care expenses or child support payments. If you pay for part of your health care, you will see this list under deductions too. Depending on the laws of your state, they might also deduct your union dues.
Contributions
This section can show money deducted from your pay in the form of contributions. It can also show employer contributions.
For example, if your employer pays for part of your health insurance benefits it would show here. It might say employer contributions for health insurance, vision insurance, and dental insurance.
If you have signed up for a flexible spending account or a health savings account to help cover deductibles from your health insurance, the contributions are deducted (and shown on the pay stub) to be deposited in those accounts.
If you pay into a pension plan or retirement savings account like a 401K, the contributions will be shown here too.
Sometimes you are able to make payroll deductions to charitable organizations. If you have signed up to do this, they would be listed under contributions.
This vs. the Other
Looking at and understanding your paycheck stub should help you to see how you go from gross pay to net pay for the pay period.
Another feature of many pay stubs in the year to date versus this pay period. It will show how much you have been taxed for federal income tax or contributed to your 401k for this pay period. Then in another column, they will show the year to date totals.
The year to date totals show how much you have paid or contributed in total for the year so far.
Attendance
Many pay stubs include information related to attendance.
This might include days related to:
- Sick time
- Vacation hours/days
- Personal days
If you used any days from any attendance category during the pay period, the subtracted time would show.
Understanding Reading a Pay Stub
While it’s nice to open your check and see how much money you get. You should also understand how much money you actually made and where it goes.
When reading a pay stub you want to make certain you know where your hard-earned money is going.
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