Understanding Your Paycheck

Whether you receive a paper check or direct deposit, your employer should send you a paycheck “stub” each pay period.  A paycheck stub summarizes how your total earnings were distributed.  This includes how much was paid on your behalf in taxes, how much was deducted for benefits, and the amount that was paid to you after taxes and deductions were taken.

Paycheck stubs are normally divided into different sections:

• Personal and Check Information:  This section includes your personal information, i.e. your name, address, and employee number.  It also includes your filing status--single or married--as well as the withholding number that you elected on your IRS form W-4.
• Earnings:  This section lists your earning from the pay period and includes overtime.  The earnings section also shows pre-tax deductions for different employee benefits that you may receive, such as health insurance and retirement contributions.
• Deductions:  This section shows additional deductions that might be taken out of your paycheck post-tax, like group life or disability insurance.
• Withholding:  This is the money that your employer is required to take out of your paycheck on your behalf and includes federal and state income tax payments, Social Security, Unemployment Insurance, and Worker’s Compensation.

While the “withholding” section contains mandatory deductions, the other sections contain information that you have more control over.  You can use information in your paycheck stub to maximize your pay both now and in the future.