How do I read my pay stub?

Reading a pay stub can seem complex at first, but once you understand the various components, it becomes easier to decipher. A pay stub provides a detailed breakdown of your earnings and deductions for a specific pay period. Here's a general guide on how to read a typical pay stub:

1. Personal Information: At the top of the pay stub, you'll find your personal information, including your name, address, employee identification number (if applicable), and the pay period covered by the stub (e.g., "Pay Period Ending: MM/DD/YYYY").

2. Gross Pay: This section shows your total earnings before any deductions. It includes your regular wages, overtime pay, bonuses, and other forms of compensation. The gross pay is typically the starting point for calculating your take-home pay.

3. Tax Withholdings:

   • Federal Income Tax: This line displays the amount withheld for federal income tax based on your Form W-4 and the IRS tax tables.
   • State Income Tax: If applicable, this section shows the amount withheld for state income tax.
   • Local Income Tax: Some municipalities have local income taxes, which are displayed here if applicable.

4. Social Security and Medicare (commonly known as FICA):

   • Social Security: This line shows the amount withheld for Social Security taxes, which fund retirement benefits.
   • Medicare: This line displays the amount withheld for Medicare taxes, which fund healthcare benefits for eligible individuals.

5. Deductions:

   • This section lists various deductions that reduce your take-home pay. Deductions can include contributions to retirement plans (e.g., 401(k)), health insurance premiums, and other voluntary deductions you've authorized.

6. Net Pay: This is the amount you'll receive in your paycheck after all deductions and taxes have been subtracted from your gross pay. It's often referred to as "Take-Home Pay" because it's the actual amount you receive.

7. Year-to-Date (YTD) Information: Your pay stub may include year-to-date figures for various categories, such as gross earnings, taxes withheld, and deductions. This helps you track your cumulative income and tax-related information for the year.

8. Employer Contributions: Some pay stubs include information on employer contributions, such as matching contributions to retirement plans, health savings accounts (HSAs), or other benefits.