Chances are that whenever you get paid, you receive a pay stub, or wage statement, describing details of the payment. Maybe you ignore the pay stub because your take-home pay looks correct. Or maybe you look it over, but find it too complicated to figure out. Either way, it’s important that you analyze and comprehend your pay stub because it tells you how your employer arrived at your take-home pay.
The first thing to know is that a few states and federal law do not require employers to give employees a pay stub. If the state has that requirement, it may dictate the type of information that must be included on the pay stub. With that in mind, this crash course covers items commonly found on a pay stub.
Pay Period Start and End Dates
This is the timeframe for which you were paid. For instance, if you’re paid biweekly, the pay period may start on Sunday and then end on Saturday of the following week.
Pay Date
This is the actual day that you get paid. For instance, if you’re paid biweekly, you may get paid within one week after the pay period ends.
Earnings
This is a breakdown of your total salary or wages for the pay period. If you’re paid hourly, you should see your hourly pay rate, number of regular hours worked during the pay period, straight-line wages, and if applicable, overtime hours worked, overtime pay rate, and overtime wages. Other types of pay may show up here as well, such as bonus or commissions received.
Gross Wages
This is your full salary or wages for the pay period – as noted in the earnings section – before taxes or deductions are taken out.
Pretax, or Before-Tax, Deductions
Pretax deductions are not subject to withholding on certain taxes and are therefore subtracted from gross wages before the excluded taxes are calculated. For instance, your premiums for health insurance provided under a cafeteria plan are not subject to federal income tax, Social Security tax, Medicare tax, and possibly state income tax.
Taxable Wages
After pretax deductions are subtracted from your gross wages, and the remainder is your taxable wages. If you have no pretax/nontaxable deductions, then your gross wages represent your taxable wages.
Taxes Withheld
This includes federal income tax, Social Security tax, Medicare tax, and applicable state and local taxes, which are withheld from your taxable wages. Your pay stub should show the withholding amount for each tax. Also, the name of the tax may be abbreviated. For instance, federal income tax may read as FIT, state income tax as SIT, Social Security tax as FICA or SS tax, and Medicare tax as FICA or Med tax.
Filing Status and Allowances
Your pay stub may show the filing status and number of allowances that you claimed on your Form W-4, which helps determine how much federal income tax should come out of your wages. The same goes for state and local income taxes, if filing status and allowances are used to determine state and local withholding.
Current and Year-to-Date
The wages and tax data on your pay stub may reflect both current and year-to-date (YTD) information. Current means the data applies to the present pay period. Year-to-date is the amount that has been amassed so far for the year.
After-Tax Deductions
These deductions are taken out of wages after taxes have been withheld. They include wage garnishment, union dues, and any voluntary benefit that does not qualify as a pretax deduction.
Net Pay
This is your take-home pay, after taxes and any deductions have been subtracted from your wages.
If you still need help with your pay stub, your human resources or payroll department can help you with the specific nature of your personal pay check.