- Oct 18, 2023
What Information is Included on a Pay Stub?
Until and unless you get paid in cash, you will only receive paychecks stubs as a daily labor; the check may be an old-fashioned paper check, although these are rare to get. Mostly, your pay will come via a direct deposit.
Once you know how to read a pay stub, it is a mighty tool for the employees. It is the best way to ensure you are getting paid per your expectations and for all your hours.
People make mistakes, which includes employers. A check stub is a perfect way to ensure you do not pay for others’ mistakes. Check stubs are crucial because you use them as proof of income. This comes in handy when applying for loans.
At first, a pay stub can be baffling. All of the lines, numbers, and abbreviations!!! But with expert guidance, the pay stub is simple.
In this article, we will touch upon this topic and make you understand the information on a pay stub.
What Information is Included on a Pay Stub?
A Pay stub will list the available information about employers and employees. For employers, this includes the name of the firm, address, and Employer Identification Number (EIN). You can see your name, the last four digits of your Social Security Number, and your home address on the employee line.
The check stub will also contain the pay period in question. This could be bi-weekly or weekly, depending upon the employer.
A check stub will also contain the pay rate and the number of hours worked. If paid hourly, the pay stub will list your hourly wages, and you have to multiply it by the number of hours worked to get your gross pay. If you’re a salaried employee, your weekly income is the same, no matter how many hours you have worked.
This is the first thing you will find on your pay stub. This is the total amount of your pay before any deductions have been made. Examples are Federal Taxes, State Taxes, Medicare, and FICA. You might also face deductions for health insurance and retirement accounts like 401k and Roth.
After general information and gross pay, you shall find this section where various taxes are withheld from your paycheck. A Paycheck may show the current pay period and year-to-date calculation.
Federal Income Tax Hidden
This is the next item on your paycheck. The amount that is taken off differs depending on how much you earn. The more you earn, the higher will be the rate of taxation. The minimum federal tax rate is 10%. The current maximum federal rate is 37%.
The employer will calculate how much your annual income will be. That particular number will show you’re in which bracket. Multiplying your total annual income by your tax bracket rate will tell your employer your total estimated yearly federal tax bill. The employer now shall look at the pay period. He shall see how many pay periods that year and divide that total federal tax bill by the number of pay periods. The outcome is the amount of federal income tax to be taken out of every paycheck.
State Tax Hidden
These tax deductions range from state to state. For example, Florida has no state income tax. But in California, the state with the highest state income tax, the state income tax rate is 13.3%.
Federal Insurance Contributions Act (FICA) taxes are the next deduction for your gross pay. FICA is broken down into two categories: Medicare and Social Security Tax.
Medicare is a health insurance program at the federal level that is proposed for people up to 65 years old. The Medicare tax rate is 1.45% of your gross income.
This federal program provides to retired and disabled people. The social security tax rate is 6.2% of your gross income.
Depending upon where you live and work, you may also see deductions from your pay in the form of local taxes. Cities like New York City and Chicago have approximately higher local taxes than the localities that do not have additional taxes at all.
Another deduction from your gross pay is for various insurance programs. Depending upon your employer, you can cash into several kinds of insurance coverage. Employers generally pay this cost, and you pay the rest, the employee. You can also have vision, dental, or life insurance plans, each involving a deduction from its gross payment.
Child Care Deduction
You can also have the expense for child care deducted from your gross pay.
Some Other Examples of Deductions:
Other possible examples of deductions from your gross pay might be the following:
- Wage Garnishment: As per the U.S. Department of Labor, Wage Garnishment is a legal process in which a person’s income is requested by the court order to be restrained by an employer for the payment of a debt like child support. If you owe child support, it can be withheld from your gross income.
- State Disability Insurance: Some states have state disability insurance. These states include California, New York, Hawaii, New Jersey, and Rhode Island. State Disability Insurance provides short-term disability coverage if something unfortunate happens.
- Additional Income: Sometimes, you have back pay incoming. This is because of an oversight in a previous paycheck. Or you may get a sequent raise that the employer needs to catch upon. Or you may see the back-pay category on your pay stub, adding something to your gross income.
- Net Pay: These pays are mostly taken out from your gross payment. The remaining amount is your direct deposit, known as net pay.
How Can You Download A Pay Stub?
Do you need a copy of your pay stub in order to verify your employment? Check whether you can access and print your pay stubs from the employee section of your company website if you still need to do so.
Ask your HR department if they can provide you with a copy of your pay stubs.
Now that you know what information is included on a pay stub, there should be no problem reading a pay stub correctly.