Reading a Paystub WHAT INFORMATION IS ON A

Reading a Paystub WHAT INFORMATION IS ON A PAYSTUB? WHAT ARE COMMON DEDUCTIONS MADE?

What is a paystub? • It is attached to a paycheck. • It will explain how much you earned, the time period you are being paid for, how much you paid in taxes, and what deductions have been made. Paycheck Paystub

What is the difference between wages and a salary? WAGES • A wage or pay is based how many hours a person works and their hourly wage or pay scale. SALARY • A salary is a fixed regular payment based on an agreed amount between the employer and the employee. • Employees that are in management positions often earn a salary. • NOT paid by the hour.

When and how often do employees receive a paycheck and a paystub? • It is based on the employer’s payroll schedule. • Every business decides which payroll schedule works best for them and their employees. • The most common payroll schedules used are 1) Monthly 2) Semi-monthly (twice a month) 3) Biweekly (every two weeks)

What is the difference between NET PAY and GROSS PAY? NET PAY • Is the amount you receive after all deductions are made from your total earnings (gross pay). • It will be the amount on your paycheck. GROSS PAY • Is the amount you earned or your total wages, before any deductions have been made.

What are DEDUCTIONS? • Is any amount of money subtracted for your wages or gross pay. • There are many deductions made from your gross pay. Types and amounts of deductions can vary greatly. They may vary depending on your income, place of employment, personal allowances, benefits offered, as well as many other factors. Deductions

What are some common DEDUCTIONS made from your wages? • Federal Income Tax: This tax is paid to the federal government. The amount of tax you owe and that is deducted from your wages depends on your income level and filing status. • State Income Tax: A tax in which the state you are living in will tax your income. Most all states have an income tax, only seven don’t. • State Disability Insurance (SDI): In several of the larger states such as California and New York this tax exists and is deducted from your wages. SDI provides short-term disability insurance and paid family leave benefits to eligible workers. The rate for this tax varies from state to state. • Health Insurance: More and more employees are required to contribute to paying for their health insurance.

More Deductions • FICA-Social Security and Medicare: FICA stands for Federal Insurance Contributions Act and is a tax. This tax is imposed on both employees and employers to fund Social Security and Medicare. These federal programs provide benefits for retirees, the disabled, and children of deceased workers. The FICA-Social Security tax rate that employees pay is 6. 2 percent of their taxable income. For instance, if your earn $1, 000 you would pay (1, 000 x. 062) = $62 dollars. Your employer also must pay the same rate of 6. 2 rate. In regards to FICA-Medicare, you will pay a rate of 1. 45 percent on your taxable income, and your employer will also pay 1. 45 percent

Pay Period = Is the period of time in which the employee worked and is paid for. YTD = year to date. Year to date refers to the period from the beginning of the year until present. Rate = is how much the employee is paid per hour. These are items being deducted from her pay. Total deductions made for this pay period. Net Pay = This is the final amount after all deductions have been made.