When we talk about paystub checks, many people know what it means, even people who have yet to enter the labor force. However, other documents concern a paycheck—one other critical piece of information comes with the paycheck that only some people know.
If you happen to be an employee receiving a paystub check from time to time, paying attention to your pay stub and understanding the details is very important if you want to plan your finances correctly. Here is a pay stub check guide and what it means to you!
What is a Pay Stub?
A pay stub is that section of a paycheck or payslip that outlines the details contributing to the total you receive.
Putting it in much simpler terms, it shows the wages earned over a specific pay period. This section is where you find details about tax, pension, and other deductions on the paycheck that amount to the value received.
The final value is what is called net pay. You have deductions on your gross income to amount to your net income. The same applies to your paycheck.
What Items Are Included in a Pay Stub?
Your paystub includes several details and information which is essential to your finances. Here is a breakdown of each of them and what it means for you
Your pay stub covers information on how much money an employee is to receive before any deductions have been made. It is not just any wage but gross wages, to be precise.
A pay stub shows your gross wage, which balances with the net salary after the deductions have been made. Wages depend on whether the employee is engaged based on salary or work hours.
Now that you know your gross income from your pay stub, another vital detail included is taxes. They are a primary deduction made to paychecks and spread a couple of tax payments. These include
- Federal tax
- State tax (including specific taxes)
- Local tax (including specific taxes)
- Social security and medicare tax
In some parts of the world, it also includes unemployment tax to the state.
Employee and employer-paid taxes are clearly outlined in the pay stub to understand better the deductions made to your paycheck.
Several deductions are incurred on a voluntary and involuntary paycheck, included on the pay stub. It varies from organization to organization. It could consist of loans, pension plans, and even child support.
- Employer sections
There are details on the pay stub that focus on the employer’s responsibilities rather than the employee’s. It could come either as contributions or as taxes.
For example, employers pay taxes on each employee, and in terms of contributions, there is also health insurance and like payments included on the pay stub by the employer.
Understanding what makes up your pay stub check at the end of every pay period is critical. This information can help you keep track of your finances.