What is a pay stub and how to read it
A pay stub functions as proof of income which lending institutions, property owners, or government offices at times ask for to certify how much you earn.
When you start earning a salary you receive a pay stub, a document provided by employers to their employees with each paycheck.
Also known as a pay slip, paycheck stub, or earnings statement, It details the breakdown of an employee’s earnings and deductions for a specific pay period. This document contains many details, and it can be quite confusing, even for those who have been working for a long time.
Here’s information you will usually see on a pay stub.
Employer information
This section includes details about your employer, such as the company name and address.
Employee information
This includes your name, employee ID or number, and sometimes your address and/or social security number.
Pay period information
Indicates the dates covered by the pay stub, including the start and end dates of the pay period, as well as the date of the paycheck.
Earnings
This section outlines the amount of money you earned during the pay period. It may include the following:
- Gross earnings: The total amount you earned before any deductions.
- Net earnings: The amount of money you take home after deductions.
- Regular pay: Your regular hourly wage or salary.
- Overtime pay: Any additional pay earned for hours worked beyond regular hours.
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Bonuses or commissions
Extra earnings beyond your regular pay, if applicable.
Deductions
This details the various deductions taken from your gross earnings to calculate your net pay. Deductions may include the following:
- Federal income tax: The amount withheld from your paycheck for federal taxes.
- State income tax: If applicable, the amount withheld for state taxes.
- Social Security and Medicare taxes: These are mandatory payroll taxes for Social Security and Medicare.
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Health insurance premiums
Amount deducted if you participate in employer-sponsored health insurance.
Retirement contributions
If you contribute to a retirement plan like a 401(k), the deduction will be listed here.
Other deductions
This could include union dues, garnishments, or other voluntary deductions.
Year-to-Date (YTD) totals
This part provides cumulative totals for earnings and deductions since the beginning of the calendar year. It helps you track your overall income and deductions for tax purposes.
Reading your pay stub is important to understand your earnings, taxes, and deductions. It helps you ensure accuracy and transparency in your compensation from your employer. If you have any questions or concerns about your pay stub, you can reach out to your employer’s HR department or payroll administrator for clarification.