We talk a whole lot about Paychecks here, but one thing we haven’t really dug into is your actual pay stub - what’s it for, what’s on it, and what does all of it mean? Every company has their own version of a pay stub but they all generally have pretty much the same stuff. Let’s take a look!
Here are Five Fast Facts on reading your pay stub:
- 🤔 What’s It For? A pay stub should accompany every paycheck. It has the same key information (how much you got paid, the dates, etc.) as on the check itself, but the pay stub should have a bunch more useful info. If you get a paper check, the stub is likely attached to it; if you have direct deposit, then you should be able to print or download each pay stub from your company’s website. Ask your supervisor or HR department if you need help finding them!
- 🤮 That’s Just Gross - One of the biggest things to understand is gross pay vs net pay. Gross pay is simply the amount that you earned for your work, but net pay is what you actually take home after taxes and deductions are withheld. In most cases, you’ll see income details like the number of hours you’re being paid for, the specific pay period, and your pay rate, as well as the total you’ve earned. You may also see things like income Year To Date, bonuses, or other company-specific details.
- 💰 Taxes - Naturally, the government takes its piece of your income from every check. It starts with taxes for Social Security and Medicare, but after that is income tax (unless you live in certain states that don’t have that). It’s hard to predict exactly how much income tax you will pay each year, but it’s based on your eventual total income per your tax bracket. When you file your taxes they either pay you back if they took too much throughout the year (REFUND!) or slap you with a tax bill if you underpaid. And when we say government, we mean federal, state, and local. They all take a cut of your hard-earned cash. You start with your gross pay, and then it’s gross how much they take out in taxes.
- 📉 Other Deductions - Aside from taxes, most pay stubs include other deductions like health care benefits, retirement contributions, disability, and insurance. This will obviously vary from person to person based on what is offered and what they select each year.
- 😯 Who Cares? All this might seem a bit tedious, but it’s actually really important. The biggest reason for double checking your pay stub regularly is to ensure your company is paying you what you expect. It’s accountability for them, and if there’s a mistake it could be costly to you! You may also need to use pay stubs when getting loans or financing on large purchases, seeking financial assistance, or when renting an apartment.
🔥Bottom line: Your pay stub is one of the most important documents you get on a regular basis. Make sure you check them, and make sure you file them somewhere in case you need them for, you know, living life.
Do you keep and check your pay stubs?
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