There are over 128.17 million workers in the United States. Learning how to read a pay stub will help you know more about your finances.
The full-time employment rate is increasing. More workers are getting paid, which means more pay stubs are out there. Now is the best time to learn about reading pay stubs.
Wouldn’t it be nice to know exactly what’s getting deducted from your pay?
Here’s some crucial information about understanding a pay stub.
How To Read a Pay Stub: Income
Understanding your pay stub means being able to interpret the income numbers.
Gross pay is the amount of money you earned before taxes and deductions. Google defines the term “gross” in a financial sense as “without deduction of tax or other contributions.”
Net pay is the amount of money you take home. This amount is determined by how many tax and deductions you have.
Knowing how to read a paycheck involves being knowledgeable about deductions. You should be aware of which agencies are taking your money and why.
Everyone has a federal income tax taken out of their check. State taxes are also common and vary in amount. Look up your state’s tax percentage for more information.
Social security gets 6.2% of your paycheck. This program helps out disabled people, retirees, and family members of disabled or dead workers.
Medicare takes out 1.45% of your earnings. This is health insurance for individuals with low income.
Your social security and Medicare taxes may be referred to as FICA (Federal Insurance Contributions Act) on the paystub.
If your employer provides health insurance, this will also be deducted from your pay. The same goes for any retirement funds or 401K.
The check number is a number issued to your check. It’s useful for tracking your finances.
The check number on a pay stub is usually located at the top of it. It’s usually near your pay period dates, but it depends on the template your employer uses for pay stubs.
If your employer uses something like PayStubs Generator, it’s located near these key dates.
Having your pay stub explained fully includes accounting for YTD numbers.
YTD means “year to date” and it’s an important part of reading a pay stub. These numbers reflect how much you’ve been paid since the beginning of the year. YTD numbers increase with every paycheck
Your YTD earnings are how much you’ve been paid so far this year. YTD deductions account for how much money you’ve paid in deductions.
YTD net pay is how much money you’ve brought home this year. This is the amount of money left after deductions.
Around 54% of Americans experience pay stub errors. Knowing how to read a pay stub correctly will help you spot these errors.
About 15% of Americans have been paid late. If you’re not careful with pay stubs, you might be missing out on money.
Get smart with money and explore the world of finances. It’ll make you a richer person.