How to Read Your Pay Stub?

by Austin Baines Content Writer

A pay stub also known as a paycheck stub or pay slip is an essential document issued to an employee by an employer along with their paycheck attached to it on their payday.

Even if they are paid by direct deposit to their bank account, then there are some platforms providing you the facility to download and print pay slips online. A pay stub is also helpful for employees to make sure they were paid correctly and understand their deductions by reviewing their pay stubs.

Understanding your pay stub is essential for financial transparency and personal budgeting. In addition to decoding your pay stub, it's also valuable to grasp what is pay stub? Everything you need to know about this vital financial document is worth exploring.

Below are some of the basic terms used in the paystubs:

Wages, Tips, and Other Compensation: In this section as the name suggest, it shows thegross taxable wage amount your employer paid you, including prizes, tips, and other compensation, as well as any taxable fringe benefits of an employee.

Federal income tax withheld: It reports the total amount of federal income taxes withheld from your pay during the year and is different for every employee.

Time off Balances: The information in these section is helpful to the employee, but also required in states like California and New York that have mandatory paid sick time laws.

State Wages, Tips, Etc. : It indicate the total amount of taxable wages for state tax purposes. State income tax is a percentage of money that you pay to the state government based on the income you make at your job.

Social Security Wages: It shows your total wages subject to the Social Security tax taken into account when average earnings are calculated.

Medical Wages and tips: It’s the total amount of wages subject to Medicare taxes. This section will generally include most taxable benefits rather than pretax deductions.

YTD Gross: The term YTD stands for Year- to-Date; which is the period beginning the first day of the current calendar year up to the current date.

Employee tax deductions: As the name suggests it include Common taxes deducted such as federal income tax, the employee portion of FICA tax, and, sometimes, state and local income taxes.

Hours Worked: This section include the number of hours the employee has worked. It’s not required in every states but it is a best practice to make sure overtime paid correctly.

Pay Period: A pay period is an essential section for a employee as a recurring length of time over which employee time is recorded and paid.

Now that you are familiar with some basic terms understanding the terminologies used in paystub; choosing the right template for yourself will be less confusing for you.

If you have questions about any of the items on your pay slip, just go to the website of Pay Stubs. It is a reputed free pay stubs online generator and you will get an error-free accurate final report.