How closely do you look at the details of your pay stub? While you may have glanced at the numbers at the top of your first few paychecks, have you revisited that information recently? And, in the days of direct deposit, when was the last time you even saw your pay stub?
Reviewing the information on your pay stub can give you a better sense of where your money is going—to insurance, retirement accounts, taxes and more—each pay period.
The details directly impact your take-home pay, so take a few minutes to go over your own stub with this guide. (All employers handle pay stubs differently, so the language and organization of yours may not exactly match.)
This is an illustrated graphic that shows a pay stub. There are a number of sections that relate to the HTML copy below the graphic, and they are labelled alphabetically so the reader can read an element of the graphic and then read details about it below the graphic. Across the top of the pay stub it reads "Earnings Statement." The first box, labelled "A" is the name, address, employee ID and Social Security number for a fictitious person named Jane Chang. She lives at 10 Main Street in Stamford, Connecticut, ZIP code 06901. Her employee ID is 12345 and here Social Security number is XXX-XX-XXXX. This box also includes her fictional employer, which reads "The Company, 500 Center Street, Stamford, CT 06901." The employer's fictional FEIN is XX-XXXXXXX. The next box is labelled "B" and it includes a pay date of "January 28, 2022," and a pay period of "January 10, 2022 to January 21, 2021." The next box is labelled "C" and it includes details on earnings, including salary, overtime, vacation, sick, FLEX and bonus. The next box is labelled "D" and "E" and it includes deductions and taxes, including FICA—Medicare, FICA—Social Security, Federal Tax, State Tax, and 401(k). The next box is labelled "F" and contains employer contributions to FUTA and SUTA, which are explained below the graphic in HTML. The next box is labeled "H" and contains net pay details, including gross pay, total deductions, net pay and then yearly totals for each of those categories. The next box is labeled "G" and contains time off balances, including paid time off, sick time and FLEX time. A final box is not labeled and contains fictional information about the paycheck, including a check numbers and Jane Chang's banking information. Across the bottom of the image is the text that reads "For illustrative purposes only."
A. General Information
● What’s included? Information about you and your employer. Typically, your name, address, Social Security number and any employee ID information. You might see your bank account information, if you have direct deposit. Your employer will include their business name and address.
● Why is it important? Your contact information will be used by the IRS for tax purposes, so regularly confirm it is up to date. If the information is wrong on the W-2 you receive around tax time, you may end up with delays in filing your taxes.
B. Pay Period and Pay Date
● What’s included? The dates for which you’re being paid and the date the check was issued. Most people are paid weekly, biweekly or monthly.
● Why is it important? Your employer uses pay periods to track how much money they are paying all employees, but you should also regularly check to make sure there are no gaps in pay periods on your stubs.
C. Wages
● What’s included? Your “gross” pay or earnings, which is the money you earned before deductions and taxes. The details may include your hours across different types of work, including: salary, hourly, tips, overtime, holiday, vacation or bonus. These will be listed for the current pay period and a total for year to date, or YTD.
● Why is it important? Checking your gross pay can help you to make sure your hourly rate is correct. Check to see that overtime is categorized and paid appropriately.
D. Deductions
● What’s included? Deductions that are required by law, some of which are called “statutory,” and some that are not. Statutory deductions include those for Medicare and Social Security, which are mandated under the Federal Insurance Contributions Act, or FICA. Other deductions may include insurance premiums, retirement-fund contributions, union dues, charitable donations and any garnishes on your wages, such as child support.
● Why is it important? If there is anything in your deductions that you don’t understand, take the time to research it or ask your employer. Sometimes you can avoid losing money in your net pay by minimizing deductions.
E. Employee Taxes
● What’s included? Taxes that are withheld by federal and state governments will be itemized for the pay period and YTD. (These taxes are sometimes listed separately or included with other deductions.)
● Why is it important? The taxes you pay each pay period depend on what exemption you declared on your W-4 form when you were hired. In general, if you declared 0 dependents, more money will be withheld each period. If you included yourself by declaring 1 dependent, then you’ll get more upfront, but may owe more on tax day.
F. Employer Contributions or Taxes
● What’s included? Itemized amounts for unemployment taxes. These are paid by employers according to the Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA), so you may see those acronyms.
● Why is it important? Employers must pay FUTA and SUTA contributions as a part of their payroll taxes, though the rules vary state by state. Note that these are not deductions, and they are included as an FYI by your employer.
G. Leave Information
● What’s included? An accounting of your vacations and sick time, including personal days and flex days. How these are displayed (or whether they are included at all) varies widely, but in some cases, you may see how much leave time you’ve used and how much you have left for the year.
● Why is it important? If you are paid for (and thus owe taxes on) your vacation time, confirm that these numbers are correct—it’s a part of your overall compensation.
H. Net Pay
● What’s included? The number you’re usually most concerned with: the amount on your check, which is also sometimes called final pay. Usually, pay stubs will include what you’ve earned for this pay period as well as for the YTD.
● Why is it important? Pay stubs are essentially a behind-the-scenes look at the math that leads to your paycheck. Making sure every detail is correct will help you to better understand your money.
Adam Shalvey is a financial writer living in Rhode Island.
Knowing where your money goes is an important step in proactively managing your finances and budget. Another important step is to conduct a personal spending analysis to get a firm handle on both your expenses and savings. a comprehensive spending analysishttps://www.synchronybank.com/blog/when-was-your-last-spending-analysis/
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