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How to read a paystub

Consumer Tips
How to read a paystub

Q: I’d like to review my paystub but it’s all so confusing. Where do I begin?

A: It’s important to review your paystub occasionally to check for possible errors and to check your withholdings. Let’s explore a typical paystub so, going forward, you can do it on your own.

Navigating your paystub

Business men work with calculator and laptop on the white table at office

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. 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 will be designated 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 are withheld.

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 for 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

Close-up of accountant working on report

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. 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.

In 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 actually see on their paycheck.

It’s important to review your paystub regularly to check for errors and ensure the correct amount of taxes is being withheld.

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