Understanding your pay check stub
June 3, 2017
I'm surprised at how many people don't understand their paycheck stubs, although considering the state of the country's education system I probably shouldn't be.
Principal: He can't do basic addition and he's a senior? Great, give him a diploma! If he doesn't graduate on time our school looks bad and I won't get a a nice pay raise. Who cares that he skipped 2 weeks out of 3, we'll change his attendance records.
It's important for everyone to understand their pay stub because there's a lot of important information in it and human resources departments make mistakes. If you don't understand what's on your paystub you won't be able to tell if your HR department makes a mistake and when they make a mistake on your pay check it can be very costly!!! Please don't be like a friend of mine who told me, "Who get's pay stubs these days? I have direct deposit. My paycheck is deposited into my bank account and I never get a pay stub." He didn't know that his employer does create a pay stub for him every payday. He hasn't checked it in years and he didn't even know that he was geting them. I sure hope that his employer didn't make a mistake on his pay checks because if they did it could have cost him thousands of dollars by now because he didn't even look at his simple paystub every week! Don't be like him, learn about your pay stub and look at it every week to protect yourself.
Here's a sample earnings statement from Pay Stub Depot. It's a simple pay stub, but it has a lot of very important information on it. Let's go over it.
First, it has the name and address of your employer and your name, possibly your address, and the last 4 digits of your Social Security Number on it. This makes your pay stub a very important document to keep secure! Don't just throw it in the trash because if someone wants to steal your identity and take out credit cards in your name this is some of the information that they will need! Shred your real paycheck stubs when you're done with them instead of throwing them in the trash!
Next it has the first and last day of the pay period that you're getting paid for and the pay date. If you're an hourly employee, this is the area where your employer is most likely to make simple mistakes. Keep track of your hours, the times you clock in and out, and compare them to your real pay check stubs every pay period to make sure that your employer paid you for all of the time that you worked. If they didn't pay you for all of the time that you worked, ask them to correct it and if they don't correct it on your next pay check contact the United States Department of Labor's Wage and Hour Division. I did that once and I got several months worth of back pay and so did all of my co-workers. One of my co-workers got a check for over $20,000, so checking to make sure that you're getting paid for all of the time that you work is extremely important!
The upper right corner of this free pay stub preview has the check number and the employee number. This information usually isn't important, but it's there in case you need to reference it.
The left half of the middle section of this simple paystub shows your hourly wage, the number of hours you worked, and your gross salary. This is the information that landlords and banks use to determine if they're going to give you a loan or let you rent an apartment or not.
The right half of the middle section of this free pay stub generator shows all of your deductions for this pay period and for the YTD, or Year To Date. Check this information very carefully every pay day because if your employer withholds the wrong amount of money from your pay check you'll have a very unpleasant surprise when you file your income taxes! Especially pay attention to the local taxes, a lot of companies don't withhold local taxes and only withhold Social Security, Medicare, federal, and state income taxes. Getting hit with a several hundred dollar tax bill from the city you live in at the end of the year is always an unpleasant surprise.
The bottom of your real check stub shows your total gross earnings for the year to date, which is your income before any taxes are taken out, your total deductions YTD, and your total net pay YTD which is how much of what you earned so far this year the government is letting you keep. The bottom of your real check stubs also shows your gross earnings, deductions, and net pay for this pay period.
I hope that this information is simple, meaningless, and boring to you but if your school was too lazy to teach you anything that you need to live in the real world, this is some of the information that they should have taught you but didn't. Now that you understand what a pay stub is and why the information on it is so important, try out Pay Stub Depot's instant paystub generator for yourself!