Understanding your pay stub is an excellent way to ensure that you are getting the right amount of money from your employer. With any luck, it will also help you figure out what deductions you should be making for things like taxes and retirement savings. Your employer usually uses an online paystub maker so that you can understand your pay stub easier. In this post, we’ll go over some tips for understanding how to read a pay stub and provide an example so that you can see how it all works together!

Overview of a Pas Stub

A pay stub is a record of your earnings and the amount that has been taken out. Most people receive them on payday, but you may also be able to access yours online if you have a direct deposit set up with your employer. Pay stubs look intimidating at first glance. They are reasonably easy to understand after looking over the layout once or twice.

As an employee, you can use your pay stub to figure out how much you have been making, as well as what has been taken from your check. If you are looking at it online, the pay stub makers similarly organize the information to help make things easier for understanding. Having a pay stub can also help you apply for loans if you ever need to borrow money.

Sections of the Layout of a Pay Stub

The layout of a paystub may vary depending on where you work and who prints them for your company, but they should all include similar information. There are four sections of pay stubs. These include:

Gross Income

It is the amount of money you have earned before any deductions. It should include your hourly rate, as well as how many hours you worked and what type of pay cycle your company uses (weekly or biweekly).

Federal Taxes

It’s the amount that has been taken out for federal tax purposes. There will be a corresponding percentage that you can use to calculate what your effective tax rate is.

State and local taxes: The amount for state and city income taxes, if applicable. These should be listed in the same format as federal ones but will likely have different percentages based on your location. You may also see deductions for things like social security, medicare, and pension contributions here.

Benefits

This section includes any benefits you have been given from your employer listed in the last part of a pay stub. It might consist of health insurance or any other type of paid time off coverage you receive through work. It is not uncommon to see something called “pretax deductions” on this part of a pay stub.

Other Deductions

This section includes any other things that have been taken out for your checks, such as 401(k) contributions or life insurance policies. Sometimes this category will also include voluntary deductions you can make to support charities and non-profits. It may be something like the United Way where you work or something more specific like the Humane Society.

Net Pay

This section should give you your total income for this period, as well as how much money has been taken out in taxes and benefits. It also lists what deductions are left to be applied to future checks (i.e., vacation time). Sometimes employers will round off numbers on this part of a pay stub. If your company does, they should round to the nearest dollar or closest whole number to make it easier for you to read and understand.

Net Income

This section shows what amount has been deposited into your bank account for this period. It will also list any direct deposits from other sources like bonuses or tax returns.

If anything on your pay stub seems confusing, make sure to ask your HR department for clarification. But, usually, most employers use online paystub makers that can release an online pay stub for you. You can access your pay stub easily. They …