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How to Understand Your Pay Stub

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Every payday you get a copy of your pay stub that is packed with numbers and data. But, how well do you actually understand the information that this piece of paper contains? You must be familiar with your pay stub and know what each entry means so that you can keep track of earnings and deductions, and be able to spot any errors that may occur. Do this to protect yourself and prevent any loss or delay of income due to inaccuracies. While it may seem intimidating at first, knowing what information your pay stub shows is easy to figure out. And, once you have this down, you will be able to spot any misinformation and make sure that you are getting every bit of the money you earned.


Basic Information

Each pay stub that you receive will have some basic information included. It will show your name, home address, job title, and employer's name as well. Review this information, especially after a change occurs such as moving to a new address, to make sure it is correct.



The part of your pay stub that you likely pay the most attention to, is where your pay is listed. This section will include the beginning and end dates of the pay period that the check is for. It will also display the number of hours that you have worked and the pay rate per hour or the salary that you have earned. If you have taken any accumulated sick or vacation days, this will likely be shown here as well.


Your pay will be broken down into categories. The first will show your gross pay which is the amount you have earned before any taxes or deductions. The net pay amount is the take home part of your pay, or the amount of money that is deposited in your account after all deductions. Most pay stubs will also display an additional figure that is labeled YTD, or year to date. The YTD meaning is meant to show the total accumulated wages, hours, or taxes so far in the current calendar year.



Every pay stub will have a section that lists all of the taxes that are taken out of each check. First is the federal income tax that you pay. This amount is standard depending on the pay you earned, and is where your tax refund comes from when you file your income taxes. If you meet the income and deduction qualifications of the year, part of the income tax you have paid will be returned to you.


Most pay stubs also include a state and local income tax. The amount of tax taken for each of these varies by state and locality. Next, are the FICA taxes. FICA stands for Federal Insurance Contributions Act and displays the amount of taxes that you contribute towards Social Security and Medicare. There is also the FUTA, or Federal Unemployment Tax Act. This tax amount is for your contribution to unemployment. These taxes are a fixed percentage of your earnings, and mandatory for all employees to pay.



After taxes, your pay stub may show some additional deductions from your wages. The most common of these deductions in the amount that you contribute to your health insurance and retirement plan. These deductions are automatic and usually mandatory. You may have the option to voluntarily withhold more money from your pay for things like an optional life insurance plan, or additional retirement savings.


Employer Contributions

The next part of your pay stub will show the employer contributions that were made for the designated pay period. These deductions do not come out of your pay. They show what amounts your employer has given towards your health insurance plan, retirement, and the required employer portion of taxes to social security, medicare, and unemployment.


Understanding your pay stub doesn't have to be a mystery. Once you are familiar with what all the abbreviations stand for and what the categories mean, you can easily check your stub for accuracy and stay informed of your finances.


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