Toss Your Paystub Every Week? Maybe It’s Time To Take a Closer Look
What you do with your paystub often depends on how you get paid. If you have direct deposit there’s a good chance that you just rip the entire thing up without a glance, confident in the fact that the money is in your bank account and all is good in your world. If you deposit your check, you probably rip off the bottom without a glance and toss it on your way into the bank or at the drive-through window. But the fact that you’ve been paid doesn’t mean that the information on your paystub isn’t important. There are good reasons for taking a closer look at the information that’s provided, and for understanding what it all means.
The most important reason to double-check your paystub is to make sure that you’re being paid correctly and that the right amount of money is being withheld on your behalf by your employer. You know better than anybody what your income is supposed to be, and mistakes do happen, but you won’t know if you don’t check. Plenty of people have found out the hard way – at tax time – that their employer hasn’t been withholding the amount that they wanted them to, and they end up with a shortfall that they have to make up.
Another good reason for looking at your paystub is to understand exactly where your money is going and what it is funding. We all remember the shock of receiving our first paycheck and finding out that it came to far less than what we thought it would be based on our salary or hourly wages. We were told it was taxes … but do you know what that really means? The information provided below should provide a better understanding of what those deductions from your gross income are, and where they are going.
Breakdown of Paystub Information:
Unfortunately, there is no one set format for paystubs. In fact, some states don’t even require employers to provide their employees with the specifics of where their money is going each week. For those who do receive paper records of their withholding amounts and more, here’s what you’re likely to find, and what it means.
Wages – This is one of the most important pieces of information on your paystub. Whether you are paid a salary or an hourly basis, the wage portion of your paystub will provide you with what the gross amount is that you’re being paid, what portion of those wages are taxable, and what your net income/check amount is. Most stubs will reflect both the wages for the pay period and the year-to-date totals.
Taxes – Every citizen is obligated to pay a portion of their income to the federal government, as well as any applicable state and local taxes. This money is used to pay for both services and administrative costs. Deductions will also be taken for the FICA tax that pays into the Social Security Administration and Medicare. Though the taxpayer may not currently be benefiting from these programs, the idea is that everybody will be eventually, and those who are working pay for those who no longer are.
Non-Taxed Deductions – Most paystubs will also reflect deductions taken from your pay for items that are not taxable. This may include contributions to a 401(k) retirement account or money that you direct into other pre-tax accounts.
Benefits – If you receive benefits such as health insurance, life insurance, sick time, and vacation time, your employer may provide information on your paystub about how much they pay on your behalf, or how much you have elected to pay for options such as a specific level of insurance coverage.
Additional Deductions – You may also see deductions taken for other items that you have requested, such as Health Savings Account contributions, parking passes, childcare expenses, and more. All of these line items should be for selections that you have agreed to. If you do not recognize an expense, it’s a good idea to check with your Human Resources department and ask them to identify it.
Knowing what you’re earning and where your money goes is just the first step to economic stability and understanding. For additional help and guidance, contact our office today.
Sign up for our newsletter.
Each month, we will send you a roundup of our latest blog content covering the tax and bookkeeping tips & insights you need to know.
We care about the protection of your data.
Junglebooks Affiliate Program
Why Partner with Us?
With years of experience and a team of certified professionals, we deliver exceptional results to our clients.
-
Industry-Leading Expertise
-
Our firm is a leader in the accounting industry, providing comprehensive services that include tax preparation, bookkeeping, financial planning, and business consulting. With years of experience and a team of certified professionals, we deliver exceptional results to our clients.
-
Attractive Commissions
-
We value our affiliates and offer competitive commission rates for every client you refer who signs up for our services. The more clients you refer, the more you earn.
-
Comprehensive Support
-
We provide our affiliates with all the resources needed to succeed, including marketing materials, dedicated support, and regular updates on our services. You’ll have everything you need to effectively promote our firm and earn commissions.
-
Trusted Reputation
-
Our firm has built a solid reputation for excellence and trustworthiness. When you refer clients to us, you can be confident that they will receive the highest level of service and satisfaction.
Frequently Asked Questions
-
This firm prepares tax returns for individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements. Our firm’s seasoned professionals are experts in all areas of taxation including:
- Individual Returns
- Payroll Tax Issues
- Business Returns
- Sales Tax Returns
- Rental Income Returns
- Business Consultation
- Expatriate Returns
- Fiduciary & Estate Returns
- Corporation Returns
- Bookkeeping
- Partnership Returns
- LLC Returns
-
Our firm offers a full range of planning services including, but not limited to:
- Individual Tax Planning
- Business Tax Planning
- Business Organization
- Rental Properties
- Foreclosures and Repossessions
- Retirement
- Investments
- Sales and Exchanges
- Pension Plans
- Education Planning
- Finance & Refinance Planning
- Home Purchase and Sale Planning
-
We are here for you twelve months a year, not just during tax season. Whether you have a simple tax question, need advice on the tax implications of a business decision, or want clarification on a government notice, feel free to give us a call.
-
We maintain a policy of the strictest confidence concerning our clients’ affairs. You can rest assured that no one will learn about your business or tax status – even relatives, associates or friends who might have referred you to us.