What Is a Pay Stub? These Are the Key Things to Know

Must yourself always viewed at your pay stub and wondered what all details meant? If you’re new to working or previously performed odd jobs for cash, you might be asking yourself “What is a pay stub”? Well, we’ll explain all of that for you here in this guide.

If you’re curious to learn more about paystubs, take a look at the information below.

1. What Is a Paystub?

A payment stub is the part of a check that provides details regarding your pay. It lists the wages earned for the pay period and year-to-date payroll. A pay stub also details the taxes and other deductions that were subtracted from an employee’s income. It also shows the amount of net pay that you earn.

Although pay stubs are provided in paper or electronic form, these days it’s most common for employees to view their pay stubs electronically.

2. What’s a PayStub For?

A pay stub is beneficial for employers and employees. Workers get pay stubs to document their wages. Not only does a check stub keep records of earnings, but employees can also use their pay stubs as proof of income for items like new cars or apartments.

On the other hand, employers use check stubs to settle monetary discrepancies with employees and make sure that they provide adequate information to workers regarding their wages.

To make payday easier and to keep a record of employees income, many employers use computer programs to create a pay stub.

3. What Is on a Paystub?

There are many details on paystubs, but the information on it is broken down into three primary categories. Those categories include:

a. Gross wages

Gross wages are the standard amount of an employee’s earnings. This initial figure doesn’t have any money deducted from it.

Depending on the type of employee you are, the way you calculate earnings varies. For hourly employees, multiply your hourly pay rate by the number of hours worked. To calculator salaried gross pay, divide the annual salary amount by the number of pay periods in the year.

b. Taxes, Deductions, and Contributions

Unfortunately, your gross pay isn’t the amount that goes into your bank account. Taxes are also taken out of your wages. On your pay stub, you’ll see federal income tax, FICA, and state and local taxes deducted. Again, if you have employee health insurance, 401K, or any other voluntary deductions, that’ll come out of your pay as well.

c. Net Pay

Net pay is the amount remaining after subtracting deductions from the gross pay. It is the figure that you take home. A pay stub thoroughly documents net pay. You can locate your current net wages for the pay period and the year-to-date net earnings on a check stub.

4. Pay Stubs Explained

Reading pay stubs is quite simple once you become knowledgeable about the information that’s detailed on it. Understanding your pay stub is essential to making sure that you are paid correctly and that the correct taxes and deductions are taken out. This is one of the primary aspects of managing your finances, so learning about pay stubs is smart!

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