Understanding how to read a pay stub and putting that knowledge to work is just as important the day you receive your first paycheck as it is the day you retire. Your pay stub contains a lot more information than just the money you can expect to receive that pay period — although that is the most exciting part!
Keep reading to learn how to read a pay stub and why doing so correctly is such an important part of improving your overall finances.
When learning how to read a pay stub, it is helpful to break the information down into three major sections:
Gross pay is the amount of money you have earned before taxes, benefits, and other deductions are removed. You’ll see two references to gross pay:
Everyone’s least favorite part of the pay stub is the money withheld from gross pay. There are several reasons money is deducted from your paycheck.
Net pay is how much money you’ll be receiving after the deductions from your gross pay. It’s typically the eye-catching bolded number. Your pay stub will show your net pay both for that pay period and year to date.
Additionally, your pay stub includes details such as pay period, the date the paycheck was issued, any paid time off, overtime hours worked, and employee identification information.
RELATED: Why Hire a Tax Attorney?
Whether you view your pay stub online or you receive a physical copy, looking it over each pay period helps to prevent any errors in your pay, withholdings, and benefits. As the employee, you are responsible for your pay stubs and ensuring they are free from mistakes.
Here are potential tax issues on your pay stub to keep an eye out for:
Once you know how to read a pay stub, you will be able to pick up on any inaccuracies that could impact your earnings. Address any potential pay stub problems with your payroll manager to have them fixed as soon as possible.
If you’re seeing problems with your pay stub that your employer can’t (or won’t) fix, S.H. Block Tax Services can help you sort it out. With over 100 years of combined tax law experience, our firm is here to ensure you’re not losing out on your hard-earned money.
Please give us a call at (410) 872-8376 or fill out the form above to schedule your free consultation.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.
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