Making Sense of Cents: How to Read a Pay Stub

The information provided on your pay stubs may seem cryptic and confusing at first. However, armed with the right knowledge, you’ll soon find them simple to understand and decipher.

Although the layout of the form may differ from job to job, the same information is included on every employer’s stubs. Some of the section titles may be abbreviated, but after you familiarize yourself with these abbreviations, you’ll never forget them.

Checking your pay stub for accuracy is something you should do every time you get paid. Even though paychecks are almost always automated by computers today, sometimes mistakes still do happen.

Errors are often overlooked by people who have their pay deposited directly into their bank accounts. Don’t be a victim and make sure you get all the pay you deserve – every single time.

Learning how to read a pay stub will be a skill you will have and use for the rest of your life. Read on to learn all about the different sections of a pay stub so you can be informed and can protect yourself from accidental errors in payment.

How to Read a Pay Stub

There are many terms you need to know to read a pay stub. All of the terms below can be found on almost every pay stub you will receive. To learn how to create a sample pay stub for practice, you can visit PayStubCreator for more info.

Employee Information

You shouldn’t have any problem understanding this part of your pay stub. It’s all about you. This section includes your name, your address, and your social security number.

Employee Earnings

The part of your pay stub that will interest you most is the employee earnings section. If you are an hourly employee, it will list how many hours you worked during the last pay period, how much you make per hour and the total amount of money you earned.

If you are a salaried employee, it will only list how much you made during the period. The hour’s default to forty, or however many hours you are expected to work as a salaried employee.

Gross Pay

Gross pay is the total amount that you earned before any deductions such as taxes were taken out.

Net Pay

On the other hand, your net pay is what you get to keep after those deductions. This is your “take-home” pay.

Employee Taxes Withheld

The employee taxes withheld section will show you the taxes that have been deducted from your paycheck. These taxes are based on the W-4 form you filled out when you were hired.

This section is usually presented in a way that will show you how much is being withheld for state and local taxes, social security, and Medicare.

Employer Taxes

Taxes that your employer has to pay do not affect your earnings. This section will show you the portion of your taxes that your employer pays on your behalf.

Employee Deductions

Depending on your position and employer, you may have additional deductions from your paycheck. If you have a medical, dental or retirement plan through your employer, the amount taken out of your check for these things will appear here.

Employer Contributions

In some cases, employers contribute to their employees’ medical, dental or retirement plans. If yours does, the amount that they provide will be listed on your pay stub as well.

Common Pay Stub Abbreviations

There are a number of abbreviations you may see on your pay stub and knowing what they mean will help you to understand things better. Some common abbreviations include:

  • YTD: Year-to-Date
  • FT or FWT: Federal Tax or Federal Tax Withheld
  • MWT or Med: Medicare Tax Withheld
  • ST or SWT: State Tax or State Tax Withheld
  • SS: Social Security Withheld

Happy Earning

Learning how to read a pay stub is easy and is a skill you will use for the rest of your life. Once you know what to look for, you can make sure that you are being paid correctly and that your deductions are what they should be every time you get paid.

If you want to read more about business and employment, please check out the articles in the business section of our site.