How to read a pay stub
A pay stub is a settlement statement. It has an earnings section, a tax section, a deductions section, and a year-to-date column that repeats every one of them. Reading it takes two minutes and it is the only document that shows whether payroll is doing the arithmetic the way you agreed.
The sections
- Header. Employer, employee, pay period, pay date, and your filing status and allowances.
- Earnings. Regular hours and rate, overtime hours and rate, and any bonus, commission or shift differential. Gross pay is the total here before anything is taken.
- Taxes. Federal income tax withheld, state and local income tax, Social Security and Medicare. Withholding is an estimate against your eventual bill. FICA is a flat charge.
- Deductions. Pre-tax items such as retirement and health premiums, then post-tax items such as union dues, garnishments and charity.
- Net pay. Gross minus taxes minus deductions.
- Year to date. All of the above, cumulative.
The four checks worth running
- Hours against your own record. If the stub is short, the burden is on payroll, not on your memory. Check overtime was paid at one and a half times the regular rate, not the base rate.
- Rate and hours against the offer. A pay rise that appears in the letter and not on two consecutive stubs is a payroll error, not a raise.
- Withholding against your filing status. Compare the federal figure to the results from a withholding estimator. A stub with no federal withholding at all is usually a mistake on a form, and the tax is still owed.
- Year to date against the last stub. The figure should move by exactly this period's amount. A jump means a retroactive correction, and you should know why.
Your right to the stub
The FLSA does not require a stub, but almost every state does, and most set a timing rule. Where a stub is required and not given, the state labour department is the enforcement route.
Our takeThe year-to-date column is the most useful and least read part of a stub. It is also the fastest way to catch a wrong withholding set-up before it becomes a bill in April.