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- How to Read a Pay Stub Abbreviations
The world of technology continues to evolve and with it comes innovations in the way we approach traditional practices.
There was a time when companies paid the employees in the form of paper checks. Then came along the ability to have their pay stub abbreviations deposited directly into their bank accounts. For employees without bank accounts, new technology introduced payroll debit cards.
How to Read a Pay Stub Abbreviations
As a result, companies built employee portals. This is an online tool for employees to download their pay stub abbreviations and other documents.
Reading a pay stub may seem elementary for those who have experienced paper checks. However, there is a new generation that may not ever see their pay stub.
Understanding a pay stub isn’t as difficult as you may think. Keep reading for a simple guide on how to read a pay stub abbreviations
Reading a Pay Stub is About Understanding the Abbreviations and Codes
Many small businesses are following corporate standards and going paperless. Employees need to have access to their reading a pay stub worksheet for various reasons.
The process doesn’t have to be difficult or costly. Companies can choose a free pay stub template and customize it with their own codes and pay stub abbreviations.
Employee portals have a legend that is easy to access and explains the meaning of each code or abbreviation. There is standard terminology throughout payroll systems so there is no need to reinvent the wheel.
Let’s look at a few reading a pay stub abbreviations.
1. Pay Codes
Most employees are more concerned about the pay than anything else. When it comes to the amount you actually earn these codes will give you the information.
2. Rate of Pay
The rate of pay or hourly rate is the amount your employer has agreed to pay you per hour. On your first paycheck, verify this amount is correct and mirrors what you were offered during the hiring process.
The only time this amount will change is when the employee is offered an increase in reading a pay stub worksheet.
3. Overtime Pay
If an employee has approved hours beyond their 40-hour workweek, there will be an amount in this category. Overtime pay is one and a half times an hourly employee’s regular rate of pay stub abbreviations. For example, if an employee earns $15 per hour, their overtime rate will be $22.50.
Employees considered exempt, are paid a salary instead of hourly pay. A salary is an annual amount divided equally over the company’s regular pay periods. The amount paid remains the same regardless of the number of hours worked during the pay period.
A salaried employee typically holds a managerial position.
5. Gross Pay
Understanding a paycheck when you know the different verbiage that can be used is helpful. For example, gross pay can also be listed as gross earning or gross wages. This is the amount of your paycheck before any deductions are taken out.
For salaried employees, this amount will be the same every pay period. Hourly employees may see a fluctuation based on the number of hours worked or if they have overtime pay.
6. Net Pay
Net pay is the money you actually take home after all deductions are made. These deductions range from taxes to benefits such as health insurance.
7. Year-to-Date or YTD
In the field listed as year-to-date or YTD is the accumulative totals of your gross pay and net pay. This amount will increase each pay period by the amount of the current pay period. At the end of the year, this total will reflect your annual income and the amount you will use when filing your taxes.
8. Payroll Taxes
Understanding a pay stub column for taxes will help you better understand your tax liabilities. Depending on the state where you live, your pay stub will include deductions state taxes. Everyone is subject to federal taxes for wages earned.
FICA stands for Federal Insurance Contributions Act. These are federal taxes that fund social security, Medicaid, and Medicare.
The tax is a set amount of 15.3%. The amount is equally between employers and employees, with each paying 7.65% of the employee’s gross pay.
Fed or federal is your federal withholding taxes bases on the information provided by the employee on their W-4. The employer uses the total number of deductions listed on the W-4 to determine the percentage to withhold for taxes.
It is important to understand your total tax liability when it’s time to file your taxes. If you fill your employer is taking too little or too much in federal withholdings, you may want to adjust your deductions.
ST stands for state taxes. This code will only appear if you live in a state that withholds state taxes. Currently, there are approximately 40 states that have this tax. It works the same as federal tax withholdings.
It may appear as ST, SI, or these initials with or without your state’s pay stub abbreviations.
Federal Unemployment Taxes is money employers pay into the state’s unemployment system. These are monies paid to unemployed workers that have lost their jobs due to no fault of their own.
13. Benefits Codes
Not all employers can afford to offer their employees benefits. This is common when it comes to small businesses. If you receive benefits, here are a few examples.
14. 401(K) or Retirement
This is the amount you are contributing to the company’s retirement plan. Sometimes the amount will also include employer contributions.
15. HFSA / DFSA
FSA stands for a Flexible Spending Account. There are two types, healthcare, and dependent care. Employees can put aside pre-tax dollars to fund these accounts.
Check Your Pay Stubs Regularly
Reading a pay stub worksheet on a regular basis ensures you are having the right deductions take out. You do not want to get to the end of the year and learn your deductions are off and you owe more on your taxes than you expected. Or worse, you haven’t contributed as much to your 401K as you intended.
We hope you found this article useful and answered your questions about pay stub abbreviations. To receive more great information, subscribe to our newsletter and get notified when we post new articles.