June 20, 2024
Understanding a Paycheck

Are you trying to learn how to read a pay stub? If yes, you should check out our descriptive and informative guide by clicking here.

It’s payday and you’re feeling good about getting that check for all your hard work.

But if you are part of the 82% of workers in the U.S. that have direct deposit, you likely won’t look like the second most important part of the paycheck: the pay stub.

Regardless if you have to take that check to the bank or the check goes straight to the bank, you need to know how to read a pay stub.

Let’s breakdown what you need to know.

Key Definition When Learning How to Read a Pay Stub

The money that actually makes its way from your employer to your pocket is the net amount you’ve been paid. The word to describe that money may vary but should include one of the following the word net: wages, payment, earnings.

This should be near the bottom of your paycheck. Or, it might be at the top after all of the deductions.

Your gross pay is the total amount of money you’ve earned according to your agreement with your employer. Gross pay or gross earnings are usually a fixed amount if you are on a salary or your hourly rate multiplied by your hours worked. Gross pay will also include incentives like bonuses.

Pay Stub

It is very unlikely that you will actually get paid your gross payment or wages.

Why Are There Two Different Amounts on My Pay Stubs?

In short, the government.

Before you actually see any money from your employer, at least three layers of government have a chance to take a portion of your paycheck through taxes. Those most common three layers are the federal, state and city/county taxes. if you live in a special tax district, there could be additional layers.

All of these deductions must be clearly labeled on your pay stub. Be sure to have a conversation with your payroll manager about what withholdings they are obligated to take out of your pay.

There are other key things that might take away from your net pay as well

You Might Pay for Benefits

Your employer must clearly list any withholds that are required for benefits such as health insurance, parking, retirement savings matches or anything else that employees are obligated to pay into.

While these are may be fixed for a certain period of time, no employee is obligated to be forced into paying company benefits. It also may be a headache trying to get your employers to exempt you from benefit programs.

You should feel free to ask your employer how they create pay stubs so you know how to read a pay stub from them.

You Know What They Say About Assuming

Payroll professionals and services are great. But they can make mistakes. Also, people who seem decent can change. There is no good reason not to be vigilant about your wages.

See our latest on business, account, and money generally in the articles below. Or sound off on what you want to know when it comes to how to read a pay stub.

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