How to read your pay stub
Most people might think of their paychecks as one thing only: money in the bank. However, a paycheck stub contains valuable information that could help you improve your money management skills.
Although companies print different types of paychecks, there are some common details that are required by law. Typically, a pay stub will include the following information: gross pay, net pay, federal and state tax withholdings, Social Security and Medicare deductions, and your year-to-date totals for your earnings and deductions. Here’s exactly what information you’ll find on a pay stub and what it all means for you.
What is a pay stub?
Your pay stub is the part of a paper paycheck that you keep after you cash or deposit the check. Typical information that appears on your pay stub includes the number of hours you worked during the pay period, the gross and net amount you made, a breakdown of the taxes you paid and a list of tax deductions.
Gross pay vs. net pay
You might be confused about the difference between your gross earnings and net pay. Gross pay is the total amount of income you earned during a pay period, which is typically one month or two weeks. Gross pay doesn’t factor in your tax withholdings, like federal income tax.
Net pay is the amount of income that you actually take home after all your taxes and withholdings have been deducted, which includes your federal tax deductions. In other words, net pay is the actual amount of money that you deposit in the bank.
How to read your pay stub
The different numbers on your paycheck might seem mysterious if you don’t know what they represent.
Here’s a full breakdown of a pay stub so you can understand exactly what information is on yours.
Employer/Company Address: The name and address of your employer
Employee No.: Your unique ID number at your place of employment; employee ID numbers are useful for distributing payroll because they give payroll managers an easy way to distinguish between employees that requires fewer characters than writing out names.
Employee Name: Your name Social Security No.: Your Social Security number
Period Beg.: Date the pay period began; “Beg.” stands for “beginning.” Period Ends: Date the pay period ended Check Date: Date the check was issued
Earnings: Shows what type of income you received; in this case, it’s regular pay, which means there’s no overtime or other type of wage included.
Hours: If you’re an hourly employee, this will reflect the number of hours you worked during the pay period. If you’re a salaried employee, this field will be blank.
Rate: Shows your hourly rate and the number of hours you worked if you’re an hourly employee; if you’re salaried, your hours default to 40 hours per week. It also includes your overtime if you’re an hourly employee, and any bonuses or commissions for the pay period.
Current Amount: Amount you’ve earned during the pay period before withholding and deductions have been taken out. Withholding/Deductions:
Shows what taxes — including federal and state taxes — were taken from your gross earnings for inclusion on your W-2; your company must report all employer taxes to the government. The government will withhold three taxes from your pay: Social Security, Medicare and your W-2 withholding tax.
Current Amount: How much was put toward your withholdings and deductions during the pay period; if you’re paid monthly, it shows your month-to-date withholdings
and deductions.
Year to Date: Refers to refers to the period extending from the beginning of the year to the present — the figure represents your total wages and deductions during that time period.
Current Amount: Reflects your gross earnings during the pay period before any withholding and deductions have been taken out.
Current Deductions: Amount of deductions — possibly including 401(k) or other retirement savings plan contributions — taken out during the pay period
Net Pay: Amount of take-home pay, or your pay after tax, after all deductions have been taken out
YTD Earnings: Amount of total earnings for the year to date, from the first of the calendar year up to and including the pay stub’s pay period.
YTD Deductions: Amount of total deductions from the first of the calendar year up to and including the pay stub’s pay period
YTD Net Pay: Amount of total net pay earnings from the first of the calendar year up to and including the pay stub’s pay period
Check Number: The check number for the specific payment
Save your pay stubs
If you need more help reading your paycheck stub or if a particular calculation doesn’t seem correct, get assistance from your HR department. Your pay stub contains important pieces of information and it’s important that you understand each piece. It’s also crucial that you check your stub to make sure it’s accurate — and let your employer know if there are any mistakes. Paycheck stubs serve as proof of income, and government agencies, lenders and landlords often request them to verify your earnings. A pay stub contains all your income information, so it’s a great tool for tracking your salary, the taxes you’ve paid, insurance premium amounts, bonus information, and vacation and overtime pay. It’s important to save your pay stubs in case you need them for anything that requires income verification.