How To Read Your Paystub
With direct deposit, it is easy to not even glance at your paystub. But it is essential to know how to read your paystub. And it’s important to review your paystub occasionally to check for possible errors and to check your withholdings. We will go over a typical paystub so that you will know precisely how to navigate your paystub. With our help, it will be simple.
Navigating your paystub
Most paystubs have the employer’s information in the upper left-hand corner, followed by the pay period for the paycheck.
Moving downward on the left-hand side, a section titled “Gross Pay” lists the employee’s gross salary per pay period, along with any additional payments. And running parallel to these numbers will be two columns, one labeled “Current,” and the other labeled “YTD,” or year-to-date.
The right side of the paystub is for tax information and deductions. Each of the items on the right-hand side of the paystub will have separate numbers for current amounts and YTD.
Finally, the paystub will summarize all the numbers listed and provide a total for net pay.
Gross Pay
Gross pay refers to the employee’s taxable income or the total amount of money earned in a pay period before taxes or deductions.
The columns labeled “Current” and “YTD” help the employee track how much they’ve earned and paid in taxes and deductions for the pay period, and the entire year through the respective pay period.
This section often includes the employee’s rate per hour and the number of hours worked.
Taxes
Here are the most common taxes listed on paystubs:
Federal income tax — The employer uses several pieces of information to determine the employee’s annual tax liability, including the worker’s marital status, income level, and the amounts of allowances listed in their W-4. Employees can adjust the amount deducted from each paystub by changing the number of allowances listed in their W-4s.
State taxes —Some states collect state income tax for each pay period.
Federal Insurance Contributions Act (FICA) — This refers to the law requiring every employee to contribute to the Social Security and Medicare programs with each paycheck. Employers must make additional contributions to these programs, which will often be listed separately.
Deductions
Besides taxes, many workers will find additional deductions on their paystubs. And, these include deductions for insurance coverage, health savings accounts, retirement contributions, and childcare costs.
Some paystubs will include a sub-section for employer contributions, which refers to any employer-sponsored contributions for the purposes listed above.
The summary
The final section of a paystub summarizes all the information and highlights the employee’s net pay or the amount of money they’ll see on their paycheck. Because this summary is so easy to find and read, many skip right over the paystub and go directly to the summary.
And now you know how to review your paystub. It’s essential to review your paystub regularly. Because you need to check for errors and ensure the correct amount of taxes is being withheld. Like this post? check out our other Money Smart Tips Posts.
