It’s finally payday! You’ve been anticipating how much money you’ll get at the end of the week or month. Once you see that your take-home pay looks correct, do you still read the rest of the pay stub?
You might be thinking, why bother? After all, why worry about the equation when there seems to be nothing wrong with the result.
You can choose to ignore the rest of your payslip. But by doing so, you’re taking quite a risk.
82 million workers have experienced paycheck errors, including late, incorrect, or non-payments. That’s over half of the US workforce!
For all you know, you might be losing money if you’re not versed at reading your pay stubs.
There’s so much information from your pay stubs that you should scrutinize. Here are the key items.
1. Basic Pay Stub Information
It’s easy to gloss over the basic pay stub details, but you really shouldn’t. Incorrect or inconsistent info may cause delays in bank approvals or confusion within tax agencies.
Make sure that your employee information (name, address, phone number, etc.), as well as the company name and address, are all correct. The opening summary should include the pay rate, the pay date, and the start and finish dates that the paycheck covers.
2. Gross Earnings
Most workers make the mistake of only looking at the net pay. However, the gross earnings are the best starting point for understanding your pay stub.
This is the total amount of money you’ve earned before taxes and deductions. You can see a breakdown of your total wages for the pay period, including overtime and also bonuses or commissions. Analyze the numbers carefully since any sort of error will affect your net pay.
3. Employee Benefits and Deductions
If you have any employee benefits, such as health insurance, 401k, dental, etc., make sure that they’re getting taken out. If you see that they’re not deducted from your gross or if the amount is incorrect, contact HR right away. There might be something wrong with the program, or worse, you might not be enrolled in the benefits that you thought you were.
Deductions can be either before or after taxes. Pre-tax deductions are more beneficial because they can lower your taxable income and bring down your tax liability.
Can’t escape death and taxes, right?
This section shows your federal income tax, social security, and Medicare. It also includes any applicable state and local taxes. These are all withheld from your taxable wages.
You’ll also see an item called ‘company tax.’ This is your employer’s tax burden and doesn’t impact your net earnings.
5. Reimbursements and Additional Details
Reimbursements are money that gets added back to your paycheck after taxes are determined. These are usually the money that you spent on purchases as part of your job.
Depending on the template that your employer used, more details may be included, such as tips, bonuses, and sick time. If you’re having difficulties understanding your pay stub, bring it to the attention of your superior. The person in charge can switch to another template or adopt the layout of a fake pay stub template.
The Takeaway: Read Your Pay Stubs to Protect Your Take-Home Pay
Everyone should make time to check the information on their pay stub. It’s important to know that you’re receiving the correct compensation for your efforts and that your money goes where it’s supposed to.
For more helpful tips, please feel free to browse through the other articles on this website.