Everyone knows the best day of the week is the day that paycheck comes sliding across your desk. There’s no doubt that everyone is aware of when they get paid, but not every worker always has the ability to fully understand their paystub.
If you’ve looked over your paystub before you might have been surprised to see a series of random numbers and designations. What does it all mean?
Becoming an expert in reading your pay stub can make you a more responsible worker and help you to stay on top of your financial status. The IRS highly encourages this kind of literacy. Need help knowing how to read your own stub? Read on and we’ll walk you through what you need to know.
The Big Basics
There are a few areas on your paystub that are likely abundantly clear to whoever looks them over, but we’ll briefly cover them regardless.
In most cases, a pay stub will contain one’s basic payment information including their full name, address, and date of the payment in question. As long as all this information is accurate on your stub, you don’t really need to pay it a second look.
Your eye will also likely travel to a number that you’re quite familiar with: the net pay section, which is the number you know you’ll be taking home this week for your work.
Other Important Areas
If you think that was all, dream on! There are a number of other sections on your pay stub you need to get familiar with. Start by looking at your gross pay, which is the amount you are owed prior to all taxes and deductions.
You should see the difference between this and your net pay section then broken down in a variety of sections.
The deduction sections explain money that was taken away for things like your 401k, your health benefits, and insurance coverage. You’ll be able to see what money was put towards each area.
You’ll also see the money you owed for your taxes broken down in a similar fashion. You’ll have money taken out for your federal and state taxes, as well as local taxes depending on where you live.
You’ll also see where money was taken out and put towards social security.
The amount of taxes withheld from your paycheck is based on a few things. Your marital status is one factor, as well as the number of allowances you claim on your W-4 employment form. Some people also choose to volunteer for additional withholding.
All of this information should be clearly stated on your pay stub, no matter if it’s from a payroll provider or an online outlet like Paystubs.net.
Reading Your Pay Stub
Reading your pay stub isn’t necessarily an easy task if you don’t have someone to walk you through what each section means. The above information can help clear things up.
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