Fifty-four percent of Americans have experienced an error with their paycheck.

Do you read a pay stub each week to make sure all the figures are correct? If not, you’re not alone — but that doesn’t mean you’re in the right. Instead of banking on the fact that HR calculated your paycheck correctly, you should always be checking for errors.

Understanding your pay stub isn’t difficult, you just need to take the time to know what you’re looking for. Keep reading to learn the basics of how to read a pay stub.

Is It Required to Receive Pay Stub?

To help you understand what you’re seeing when reading a pay stub, you need to have access to your pay stub in the first place.

All fifty states are required to keep records of your payment information. And if possible, they’re required to provide you with these records on a regular basis or if you ask for them. This means that your place of work should have a paystub format that you can look at, they just may require you to ask for it first.

Even the smallest employers need to have all the payment information accessible in case an employee asks for it. Employers need to know how to create real check stubs and have a secure way to keep a record of them.

Understanding Gross Pay and Net Pay

As an employee, the thing you’re probably most interested in when you get your paycheck is how much money you’ll receive. The amount of money that goes into your bank account will be labeled as your net pay.

You’ll also see a figure that’s called gross pay, which will be higher than your net pay. This is calculated as the number of hours you worked in the pay period times your rate of pay. Net pay is calculated as your gross pay minus all your deductions.

Pay Attention to the Taxes and Deductions

Pay stub deductions can add up and cause your net pay to be drastically lower than your gross pay. It’s important to understand what all these deductions are for.

On your pay stub, taxes can appear in several forms — federal, state, and county. These percentages and amounts will vary depending on your tax bracket and location. You’ll also see deductions for social security and medicare taxes.

There are also optional deductions that you can enroll in. These can include health insurance and retirement plan. You’ll be able to control how much money is deduction into these categories based on your own enrollment choices.

Now You Know How to Read a Pay Stub

After reading this article, you now have a better understanding of how to read a pay stub.

This knowledge will help you to keep better track of your income and truly understand why there’s a difference between your gross and net pay. By paying attention to your pay stub every time you get paid, you’re more likely to catch mistakes that HR might make. Finding and fixing these mistakes early can result in a larger net pay or fewer owed taxes at the end of the year.

Interested in learning more about how you should be handling your paycheck once it’s deposited into your bank account? Head to the Finance section of this site for all the best personal finance advice.

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