Congratulations on your new job! Getting that regular paycheck is cause to celebrate but those pay stubs can also be cryptic. Here’s what you need to know to better understand your paycheck…
When Will I Get Paid?
The timing of your paycheck depends on your employer and the state you work in. You could be paid weekly, bi-weekly, semi-monthly, or monthly. No matter the schedule, you’ll receive your paycheck on a set payday.
State laws ensure that employers pay you on time. They can’t pay you less often than required, but they can pay you more frequently if they choose.
How Will I Be Paid?
Expect to receive your paycheck via direct deposit or check. Direct deposit sends your money straight to your bank account, making it a convenient, paperless option. Even with direct deposit, you’ll get a pay stub or statement showing details similar to a physical check stub.
Your pay stub will show:
- Payment date
- Pay period dates
- Hours worked
- Wages earned (before and after taxes)
- Deductions
Some states require direct deposit, while others don’t. Direct deposit has benefits like avoiding lost checks and faster access to your money. Choose the payment method that best suits your needs.
Understanding Your Pay Stub
Every pay period, you’ll get a summary of your earnings and deductions. It’s important to understand these details. Here are common terms you’ll see:
- Gross Pay: Total earnings before deductions and taxes.
- Net Pay: Earnings after deductions and taxes.
- Year to Date (YTD): Total earnings since the start of the year, shown in both deductions and pay sections.
- Federal Income Tax (FIT, FT, FWT): Based on your W-4 form, this is the federal tax withheld from your paycheck.
- State Income Tax (ST, SWT): State tax withheld, varying by location.
- Social Security Tax (SS, SSWT): Required withholding for Social Security.
- Medicare Tax (MWT, Med): Required withholding for Medicare.
These Social Security and Medicare taxes are called FICA (Federal Insurance Contribution Act) taxes. Employers withhold 6.2% of your gross income for Social Security (up to an annual limit) and 1.45% for Medicare, and they match these amounts.
Other Possible Deductions
Your pay stub may show additional deductions, including pretax and after-tax deductions:
- Pretax Deductions: Taken before taxes, reducing taxable income (e.g., medical insurance, 401(k) or 403(b) contributions).
- After-tax Deductions: Taken after taxes, not reducing taxable income (e.g., Roth 401(k) contributions).
If you need more information about your pay stub, contact your human resources department. If you suspect any errors, don’t hesitate to reach out to them.
By understanding your paycheck and pay stub, you can better manage your finances and ensure you’re getting paid correctly.
