How to Read a Paycheck Stub: Everything You Need to Know

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The United States labor force is comprised of over 160 million individuals. Do you know what the vast majority of those people have in common?

They all receive a paycheck and stub on at least a monthly basis.

Getting a check and a stub is something that every professional learns to love over their careers. To that end, if you're entering the labor force for the first time, it's important that you figure out how to read a paycheck stub in order to make sense of what's being presented to you on your check.

Below, our team briefly breaks down key sections that you'll find on your pay stub so you know what you're looking at.


Earnings

No matter what piece of software your employer is using as a check stub maker, at the top of your stub, you're going to see your earnings.

The earnings section of your paycheck's stub will break down how many hours you've worked, at what rate those hours were worked, and how much money you were paid during your current pay period. Next to that, you'll see how much money you've been paid this year so far.


State / Federal Taxes Withheld

Situated nearby the earnings section of your pay stub, you'll find how much money the government made off of your labor. That section should be broken out into rows that tell you how much of your money went to the federal government and how much of it went to state programs (Medicare, state income tax collections, etc.)

If you have a city income tax (like Manhattan does for example), you may also see that on your stub.


Employer Taxes

One of the beautiful things about working for somebody else is that they are forced to help subsidize portions of your tax burden. The degree to which your employer is helping pay your taxes is located in the employer taxes section of your pay stub which should look a lot like the employee tax section.

For the most part, this isn't a section that you need to pay attention to.


Deductions

When we're teaching people in person how to read a paycheck stub, one of the sections that confuse them the most is the deductions section. Deductions account for money that you're contributing to optional benefits programs. These programs include medical insurance, dental, vision and possibly a retirement plan.

As with the rest of your stub's sections, you'll see how much you contributed during this pay period and how much you've contributed over the course of the year.


Employer Contributions

Many employers elect to subsidize employee participation in health and retirement programs. In the employer contributions section of your stub, you can see to which degree your employer is adding value to your benefits.

As with employer taxes, this section shouldn't be of serious concern to you unless you suspect that your employer is under contributing to programs that they pledged certain amounts to.


That Sums Up How to Read a Paycheck Stub

Understanding how to read a paycheck stub is a right of passage for workers. Now that you have a better understanding of what your stub it trying to communicate to you, collect your checks with confidence and don't be afraid to speak up if something seems off.

Mastering finance is hard work. Our team aims to make things easier. If you're interested in learning more about all things money, read additional content on our blog!

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