Are you expecting your salary soon? You should take a moment to check your pay stub!
Pay stubs are important when getting your paycheck. They provide visibility, accountability, and payroll compliance. No wonder most companies prefer using paystubs today.
Maybe you want to know the system better to fully appreciate it. If so, here are five important things you need to know about your pay stub!
1. General Details of the Employees
A pay stub has its general details typically placed on its upper area. Here, you can find the company and employee information. Additionally, pay stubs have employee details such as a name, address, email, and social security number.
Before starting employment, you first have to complete a W-4 form. This is to inform your employer about your tax situation.
They let you choose how many dependents you are claiming. Keep in mind that your employer may withhold more taxes depending on whether or not you have dependents.
2. Opening Summary
The opening summary in your pay stub includes your pay date, pay rate, and pay period. The pay date simply shows the day when your employer gave the pay stub.
Your pay rate should show how much you get paid for a certain time period. For example, you’ll see whether you get paid $50 per hour or $200 per week. It can also show the standard total per day or total annual income.
The pay period shows the start and end dates of your work. It covers the time the paycheck covers.
Deductions are the cash amounts taken out of your paychecks. Deductions are usually shown in two places: deductions current and year to date deductions.
Current deductions are the amounts taken out of your current pay period while the year to date deductions are the total amounts for each type of deduction.
What are the different types of deduction along with their codes? Some of the most common ones include the following:
- Federal Income Tax
- Taxes paid to the state
- Social Security Tax
- 401(k) retirement funds
- CHSPPRT: Child Support Payments
- LV/LEVY: Tax Levies
If you happen to have a mistake in your deductions, it’s your responsibility to report it. Check the information on your last pay stub and make sure it matches the info on your W-2 form. On your W-2 form, you should have a list containing the details of your wages and taxes paid for the year.
This is the section including your employer’s contribution to paying taxes. Some of the standard contributions include:
- Social Security: 6.2% contribution
- Medicare or Healthcare: 1.45% contribution
- Federal unemployment insurance: 100% employer-paid
Other contributions are dental, vision, and medical check-ups. Employers also pay for state unemployment and local taxes. They also pay for overtime, tips, bonuses, and paid time off.
Prevent mistakes and know where your money goes.
5. Total Pay and Net Pay
Knowing the difference between total pay and net pay makes a big difference in your budgeting.
Total or Gross pay is the amount of money you earned from the job for the current pay period. It is the amount before you apply all the deductions and contributions.
The Net or Final pay is the result of applying deductions and contributions. It is the total amount of your paycheck for your work period.
If you plan to run a business and make pay stubs for your employees, check this pay stubs maker.
Keep an Eye and Read Your Pay Stub!
Knowing these important parts of a pay stub helps employees and employers get rid of confusion and confrontation. Take your time to understand each section to fully grasp how much you earn, where deductions went, and if you should raise concerns for any potential disputes.
Of course, dealing with your pay stub is only the beginning! To further improve productivity at work, feel free to read our other business guides right here! We provide all sorts of lists and tips and tricks for you to check out now!