BUSINESS

How to Read a Pay Stub: The Basics to Know

Every employer is different, but the way they pay and provide details to their employees is largely the same.

Employers are not required by federal law to provide a pay stub. But, under the Fair Labor Standards Act (FLSA) and state legislatures, many are required to provide key information to their employees, such as the number of hours worked and their rate of pay.

Wondering how to read a pay stub? Keep reading for our guide on how to understand this important information.

What is a Pay Stub?

A pay stub gives you an in-depth explanation of your earnings at work. It is delivered with your paycheck or voided direct-deposit check.

How to Read a Pay Stub

Most companies follow a similar paycheck stub template which contains important details such as your tax deductions, insurance payments, and yearly take-home earnings. 

1. Employee name and address

This should contain your current name and address. Be sure all the information is correct.

2. Company’s name and address

This is your company’s name and address. It may vary from where you actually work.

3. Employee ID or SSN

This is identifying information associated with you, which will be used for taxes and other important purposes.

4. Pay type

Are you an hourly or a salaried employee? This section will specify this information.

5. Pay period

This is the actual date range that the pay stub is for. If you’re wondering how to read a pay stub, then this section is what tells you the time period that you’re being paid for.

6. Pay date

Your pay date is the date you’re receiving your pay stub. If your company follows a regular pay schedule, then the “pay date” should coincide with your payday.

7. Hours worked

When you’re reading a pay stub, the “hours worked” section specifies how many hours you worked for that given pay period. If you work a basic 40-hour workweek, then this section will always be the same (unless you worked overtime).

8. Rate of pay

When you’re figuring out how to read a pay stub, the pay rate section is simple enough to understand. This is how much you make on an hourly basis. If you’re salaried, then your salary will be divided into an hourly figure.

9. Deductions

If you’ve elected to have any deductions taken from your paycheck, they will appear in this section.

10. Taxes withheld

Another important part of reading a pay stub is understanding the taxes that are withheld. These are deducted from your pay stub and are paid to the government by your employer.

11. Gross Pay

This section reflects the hourly amount of money you made before any deductions.

12. Net Pay

If you’re wondering how to read a pay stub, the “net pay” specifies the actual take-home amount as reflected by your paycheck or direct deposit payment. This is after taxes and all other deductions are taken from your gross pay.

Understanding Your Pay Stub

Your pay stub provides important details that help you understand how much money you made, as well as where (and why) deductions occurred. Now that you’re more familiar with how to read a pay stub, you’ll be ready to understand this information and how it relates to your take-home pay.

For more topics, check out our other blog entries.