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What Is a Pay Stub? Understanding the Information on Your Paycheck

June 15, 2020

Did you recently join the workforce? Or are you about to start as a new employee for the very first time? Aside from learning the rules and regulations in the workplace, there are other important things you need to pay close attention to. 

And one of which is your pay stub. But “what is a pay stub?” you may ask. It is an important part of your paycheck that contains vital information about your pay.

Recent studies reveal that 82 million American workers encounter issues with their paychecks.

About 64 million of them say that their pay stubs are hard to read. Thus, it is crucial, among other things, to learn and understand what your pay stub is telling you.

Continue reading below as we tackle the pay stub and teach you how to read one.

What Is a Pay Stub?

“What is a pay stub?” That is a question that most new employees ask as they enter the workforce. As we mentioned earlier, it is a portion of your paycheck that shows valuable information about your salary.

Essentially, a pay stub itemizes your wages for a particular pay period. It also shows you how much of your salary the government takes away for your income. It also gives you a breakdown and the final amount of your pay.

Your employer must provide you with a pay stub for every pay period. The employer normally attaches the pay stub with the paper check. In case you receive your pay via direct bank deposit, your pay stub will be available online for viewing and printing.

Expect your employer to provide your login credentials to view your pay stub online.

What’s In a Pay Stub: Gross Wages

The next item you need to understand is the pay stub information. What’s exactly in your pay stub? Pay stubs may have minor differences from company to company.

However, there are fundamental elements that must be present aside from your name.

Let’s start with the gross wages. This is the starting point of all the pay that you received. It covers the money the employer owes you before they take out the deductions.

Concerning this, your pay stub must show your current gross pay, as well as your year-to-date totals. Also, it must indicate the dates that cover the payslip. It must show the beginning and ending dates of your payroll.

Furthermore, your pay stub should give you a summary of the number of hours you worked. The details for this depend on the types of hours that you rendered. Also, expect your pay stub to show you your pay rate.

Your Taxes and Deductions

As we mentioned above, your pay stub must indicate the amount deducted from your salary. Your employer must give you a breakdown of the deducted portions.

These deductions include your Social Security and Medicare contributions. They also cover all federal, state, and local taxes. If your company offers retirement plans or insurance, they should also indicate the deductions for these.

Furthermore, your employer must include wage garnishments. These are for outstanding debts that you need to pay off like child support payments or tax bills.

In case your employer owes you some back pay, your pay stub should also reflect that.

Last but not least, it should include your net pay. This is the final amount of salary that you will receive less all the deductions.

Sometimes, employees experience issues and inconsistencies with their paychecks. There are instances when the pay stubs are missing valuable information. This tends to happen in larger businesses with hundreds of people on the payroll.

Thus, business owners should consider investing in a reliable paystub maker. This will help ensure quick and accurate printing of the pay stubs.

Getting Your Computations Right

Another important aspect you need to learn is calculating your net pay correctly. The formula is simple: Take the amount of your gross pay minus all the deductions.

The tricky part lies in your taxes and other deductions. It is best to consult with your payroll personnel if you feel there are errors or discrepancies concerning these deductions.

Also, there are several paycheck calculators available online. These calculators can help you analyze the details of your paycheck. They can also help you get an estimate of how much you are going to take home when payday arrives.

What Are Its Uses?

Now you may be wondering if that is all there is to a pay stub. What other uses does your pay stub offer?

First, you can use your pay stub to secure that loan. It can be a housing loan or any type of loan. When applying for a loan, the lender will ask for your proof of income.

Sometimes, they will ask for copies of your most recent pay stubs. In turn, they will use it to assess if you qualify for the loan.

Another use for pay stubs is when verifying your salary and employment history. When applying in a new company, the latter may ask for your pay stubs to check your salary history. They also use it to ensure that you were an employee of your previous company.

Your pay stubs can serve as a tool to vouch for your employment history. It also protects recruiters from applicants who may be falsifying their credentials and backgrounds.

Last but not least, you can use your pay stubs to confirm if your company is paying you correctly. When you get a physical or digital copy of your pay stubs, make it a habit reviewing the details.

Go through each line and take note of the deductions. Keep your pay stubs in a safe place. You may use them as a reference in case your employer makes an error in the future.

Become a Wiser Employer or Employee

Now that you know the answer to the question “what is a pay stub,” you can track your earnings more precisely. But getting your paycheck right is only one of the many things an employee needs to learn.

We encourage you to check our different blog posts on businesses and employment. We discuss relevant topics that will help both employers and employees grow in different aspects.

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About Me

Hello all!!!! I'm Darcy and I recently started writing on My Zeo about health and fitness (and part of that important health equation is sleep!). As we are all super busy with life, I try to integrate how to stay fit, relax and be healthy and happy through everyday life.

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