Payment on a monthly is common among most employees. This means that they are going to receive a pay stub at the end of the month with the details of the pay and deductions. For most of the people, their biggest concern is the bank balance and not the details of the pay stub. However, knowing how to read the pay stub is vital because it will help you in budgeting, know whether you have been overpaying tax, and also know whether the employer has underpaid you. Ahead is a guide about how to read the pay stub.
The first section on the pay stub is the payment. Net and gross payments are two types of earnings that you will find on the pay stub. Gross payment is the amount that you receive from the employer before the deductions. Some of the aspects of the gross payment is the overtime, basic pay, bonus, and allowances. After the deductions are taken out, what is left is called the net pay. Look on this page to see how the payment section of the pay stub look like.
The pay stub will have a section for a deduction that you should understand. In the pay stub, there are different deductions that you will pay. You will first be required to pay the tax. The IRS is the one that collects the federal income tax from the employers. Income and allowance are things that make people pay different taxes. The state tax will also be deducted from your income. State tax varies from one state to another, and they are used to finance various projects. You will be required to pay the social security as it will help you when you are old or unable to work. You will also be required to pay health insurance called Medicare that will pay the medical expenses when you are old. There are many deductions that you may see on the pay stub. If you would like to know more refer here.
You should make sure that you have double-checked the information in the pay stub. Identify anything that might be missing in the pay stub. The details contained in the pay stubs are supposed to be consistent with the current month. The deductions are supposed to be of the right value. The state tax should be consistent with your state. There is a lot of information that you should check on the pay stub; click here for more.
Pay stubs are essential documents for both the employer and employees. When you are filling the W2 form, you will also require the pay stub. The pay stubs can be used to settle any problem that the employee may have. On this website, see the sample of the pay stub.