How to read your paycheck

Read this list to see everything that’s included on or with your paycheck.

Paycheck example.

Pay stub
The additional form that’s attached to the check is called the pay stub. It shows the details of what you have earned and what amounts have been deducted during the pay period.

Pay period
Your check shows the pay period, that is, the calendar days for which you are being paid.

Gross income
Find your gross income, the full amount you earned during the pay period.

Net income
Your net income or take-home pay is the amount you’re being paid after taxes, insurance, or other costs have been subtracted from your gross income. (While it’s great to see the total you’ve earned, your take-home pay is the amount of your check. When you plan your spending, be sure to use this smaller, net income, figure. It’s the actual amount of money you have to work with.)

Withholding allowances
Your check also shows the number of withholding allowances you are claiming. It determines how much money your employer takes out of every paycheck to help cover your taxes and whether, at the end of the year, you’ll receive a refund or owe more taxes to the government. When you start a new job, you’ll be required to fill out a federal W-4 form and indicate this number.

Taxes
Your check also includes a section that shows your taxes. Remember: you don’t take home every dollar you earn. You must pay taxes and employers by law must pay them from your paycheck. The most common taxes are federal income taxes and in many states, state income taxes.

Social Security
You have to pay a Social Security contribution with each paycheck to fund retirement and medical care after retirement.

Workers’ compensation / disability
Your workers’ compensation or disability taxes fund programs that provide support if you’re injured on the job or are unable to work.

Unemployment
Contributions to unemployment insurance provide support if you lose your job through a lay-off or no fault of your own

Benefits
If you’re a full-time employee receiving health insurance benefits, you usually have to pay part of the cost yourself, and it’s often deducted from your pay.

Other deductions
Sometimes other deductions may be taken from your paycheck, for example, union dues or contributions to savings and retirement plans that you choose to participate in.

Note: It’s a good idea to read your pay stub every time you get paid. Make sure it’s correct, and ask your boss if you have any questions.

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