Ensure that you’re meeting all requirements with this guide to what information is on a pay stub.
Have you ever thought about what information is on a pay stub?
Whether you’re a company or employee, it’s essential to know what information is on your pay stub. Knowing what’s on your pay stub can help you decipher any mistakes on it, such as hours worked, total earnings, and correct payment. You will also need your pay stubs for filing your federal and state income taxes.
In this article, we’ll break down all the details and required information that is on a pay stub.
What Is a Pay Stub?
A pay stub is a type of receipt that comes with a paycheck that has all the vital details that amount to an employee’s earned income.
Paystubs show tax deductions, medicare deductions, and an employee’s net pay and what rate they are being paid.
In most states, an employee is required to issue a pay stub along with their paycheck.
Why Are Paystubs Important?
Pay stabs are essential because they show you all the necessary information for an employee’s income.
Pay stubs help identify any errors to an employee’s payments if one should come up.
What Information Is on a Pay Stub?
There are four things a pay stub that you want to pay attention to. These include:
- Gross Wages
- Deductions from governmental taxes
- Other Deductions
- Net pay
This is an employee’s pay before any deductions. Deductions are state tax, local tax, federal tax, social security, and Medicare.
Deductions From Governmental Taxes
Your federal taxes withheld is dependant on how much you earn from your employer. Depending on how much you make, you will be placed in a specific tax bracket, which determines how much federal taxes get taken out.
Some states have their own tax amounts withheld held. This is known as a state tax. Larger metro areas such as New York City take out an additional local city tax that pays for their own governmental services. Check with your state to see if state or local city taxes are taken out.
On top of federal, state, and local taxes, you will also see other governmental contributions required, known as FICA (Federal Insurance Contributions Act). FICA includes Social Security and Medicare, in which those amounts are deducted.
Other Deductions and Additions
Other than federal and state tax, other deductions may come out of your gross pay indicated on your pay stub.
These deductions can include:
- Insurance Benefits
- Garnished Wages
The net pay is your “take-home” pay. In other words, this is the amount you receive after all of the deductions listed above.
Reasons Why You Might Need a Pay Stub.
Whether you are an employer or employee, there are reasons why you might need a pay stub.
These reasons can include:
- Verifying employment
- Salary history
- Checking for errors
- Securing a loan
- obtaining a checking account
The Importance of a Pay Stub
Pay Stubs are vital because they possess crucial information when it comes to an employee’s pay. If an employee asks about errors in a payment or if the employer sees incorrect information, you can look to a pay stub as your first clue to the problem.
Banks, lenders, and potential employers may require a pay stub to verify income to move forward. We hope this article helped you with what information is on a pay stub. Come back and visit us for more technology-related articles.