Are you starting your first job ever and want to learn all about pay stubs? Or maybe you’re hiring people and would like to know what to include on their payslips?
This important document is a detailed explanation of an employee’s wage. It includes information about taxes and contributions, benefits, annual earnings, and much more.
Sometimes, all this information can be confusing, but once you know how to interpret it, it’s easy to understand.
So what does a pay stub look like and what should it contain? Read on below to find out.
A pay stub or a payslip is an official document that indicates how much an employee is paid. It’s a form of communication between the company/employer and the worker and includes full details of the wages paid each pay period.
If you’re wondering what information is on a pay stub, create one using websites like www.paystubcreator.net. It should include things like gross pay, net pay, FICA, taxes withheld, and payroll earnings. We’ll explain each of these terms below separately.
Gross pay is the wage before taxes, deductions, and contributions. This is also the pay an employee is offered when starting a new job, so they can calculate how much they’ll be taking home.
This is why payslips also state the net pay, which is the amount of money remaining after all the taxes and deductions.
The paycheck stub will also help you show the federal, state, and local taxes withheld from the wage. Federal taxes are based on tax brackets, and they will correlate to the tax bracket the employee is in.
Taxes are withheld from the paycheck automatically and are sent directly to the IRS. Some cities like New York have their own local taxes, so these too will be deducted from the salary.
Benefit insurance deductions are contributions to health, vision, life, disability, and other employee benefits.
If the employer contributes to these benefits, this will be stated in the pay stub information.
FICA stands for Federal Insurance Contributions Act, and every worker has to pay this amount as a contribution to social security and medicare.
FICA is mandatory, so you’ll see it on every payslip you’ll ever give or receive in your life.
Year-to-date payroll earnings are the money an employee has earned from the beginning of the year until the date of the paycheck.
There is the gross and net pay, along with the total taxes, benefits, and contributions for better reference.
Now You Know What Your Pay Stubs Should Look Like!
If you’ve been wondering “what does a pay stub look like?”, pay attention to things like gross and net pay, all the tax deductions and contributions, and the overall payroll earnings.
For more business and finance news, read some of the other articles on our blog where we share the latest trends in the industry.
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