82 million Americans have noticed errors in their payslips.
This is more than half of the working force. To avoid errors that leave you with less money than you earned, it’s important to understand what your pay stub is and how to read it.
Keep reading to learn more about payslips!
What Are Payslips?
A payslip is a note that is provided to employees to document their pay and the money that’s withheld from their paycheck.
The payslip will document what time period the pay was for and break down the gross payment, net pay, and the specifications of the taxes that are withheld. Money that is withheld can be from:
- retirement/pension
- wage garnishments
- benefit insurance
- federal and state taxes
- FICA taxes
A pay stub can either be in a digital or a paper format. Your employer is required to provide you with a payslip each time you get paid so that you’re aware of where your money is going and how many hours you’re being paid for. The only times that an employer doesn’t have to provide a payslip is when the employee is:
- A policeman
- A freelancer or contractor
- A merchant seaman
- A worker in share fishing
It’s your legal right as an employee in most professions to see how you’re being compensated for your work in the form of a payroll stub.
With how personal a payslip is, many people wonder, “can you fake paycheck stubs?” The answer is yes, there are many online companies that will create a fake paycheck stub for you.
Breaking Down What’s Included on Your Paycheck Stub
We know what’s listed on your payroll stub, but what does it all mean?
This is what is being taken out of your paycheck or listed and why:
Gross Pay
Your gross pay is what you earned before any taxes were taken out of the paycheck.
The gross pay is also what your paycheck looks like before you’ve taken any Social Security, Medicare, insurance, or retirement contributions out. Your gross pay is what your company will offer when discussing a job position, so always remember to factor that in when interviewing.
Federal Taxes
The amount of federal taxes that are withheld will depend on where you fall on the tax bracket.
In the United States, taxes can be under 15% or above 30%. How much you have to pay will depend on how much you make.
State Taxes
Each state has its own income tax percentage.
Some states will use the IRS tax bracket as a guide while others will use their own flat rate. Some states may even have no income taxes at all.
State taxes can get complicated, so it’s best to speak with a professional if you’re confused by yours.
Benefit Insurance
If you’re contributing to a medical or dental plan, you’ll see this come out of your paycheck every week.
Additionally, any percentage that you’re contributing to retirement will appear on the paycheck.
Do You Understand Your Payslip?
While you may feel confusion over all the fees taken out of your payslips, once you break it down it’s not too complicated.
Understanding what’s going to be taken out of your paycheck each pay period will help you plan for expenses. If you found this article helpful, check out our other work content!
