Where Your Money Goes: How to Read Your Pay StubLearn the difference between gross pay and net pay.

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Most people might think of their paychecks as one thing only: money in the bank. However, a paycheck stub contains valuable information that could help you improve your money management skills.

Although companies print different types of paychecks, there are some common details that are required by law. Typically, a pay stub will include the following information: gross pay, net pay, federal and state tax withholdings, Social Security and Medicare deductions, and your year-to-date totals for your earnings and deductions. Here’s exactly what information you’ll find on a pay stub and what it all means for you.

Learn: How to Budget Your Paycheck Like Elizabeth Warren and Jean Chatzk

What Is a Pay Stub?

Your pay stub is the part of a paper paycheck that you keep after you cash or deposit the check. Typical information that appears on your pay stub includes the number of hours you worked during the pay period, the gross and net amount you made, a breakdown of the taxes you paid and a list of tax deductions.

Gross Pay vs. Net Pay

You might be confused about the difference between your gross earnings and net pay. Gross pay is the total amount of income you earned during a pay period, which is typically one month or two weeks. Gross pay doesn’t factor in your tax withholdings, like federal income tax.

Net pay is the amount of income that you actually take home after all your taxes and withholdings have been deducted, which includes your federal tax deductions. In other words, net pay is the actual amount of money that you deposit in the bank.

How to Read Your Pay Stub

The different numbers on your paycheck might seem mysterious if you don’t know what they represent. Here’s a full breakdown of a pay stub so you can understand exactly what information is on yours.

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  1. Employer/Company Address: The name and address of your employer
  2. Employee No.: Your unique ID number at your place of employment used by payroll managers instead of your full name
  3. Employee Name: Your name
  4. Social Security No.: Your Social Security number
  5. Period Beg.: Date the pay period began; “Beg.” stands for “beginning.”
  6. Period Ends: Date the pay period ended
  7. Check Date: Date the check was issued
  8. Earnings: The type of income you received, which can include regular pay, overtime pay or other types of wages
  9. Hours: The number of hours worked during the pay period if you are an hourly employee — left blank for salaried employees
  10. Rate: The hourly rate and number of hours worked if you’re an hourly employee, as well as any bonuses or commissions for the pay period
  11. Current Amount: Amount you’ve earned during the pay period before withholding and deductions
  12. Withholding/Deductions: Federal and state taxes taken from your gross earnings for inclusion on your W-2, including Social Security, Medicare and W-2 withholding tax
  13. Current Amount: An itemized list of withholdings and deductions for the pay period
  14. Year to Date: The period starting from the beginning of the year to the present; the figure represents your itemized deductions during that time period
  15. Current Amount: Your gross earnings during the pay period before any withholding and deductions have been taken out
  16. Current Deductions: Amount of deductions — possibly including 401k or other retirement savings plan contributions — taken out during the pay period
  17. Net Pay: Amount of take-home pay, or your pay after tax, after all deductions have been taken out
  18. YTD Earnings: Amount of total earnings for the year to date, from the first of the calendar year up to and including the pay stub’s pay period
  19. YTD Deductions: Amount of total deductions from the first of the calendar year up to and including the pay stub’s pay period
  20. YTD Net Pay: Amount of total net pay earnings from the first of the calendar year up to and including the pay stub’s pay period
  21. Check Number: The check number for the specific payment

Related: 20 Perks of Direct Deposit

Save Your Pay Stubs

If you need more help reading your paycheck stub or if a particular calculation doesn’t seem correct, get assistance from your HR department. Your pay stub contains important pieces of information, and it’s important that you understand each piece. It’s also crucial that you check your stub to make sure it’s accurate — and let your employer know if there are any mistakes.

Find Out: What to Do If You Lost Your W-2

Paycheck stubs serve as proof of income, and government agencies, lenders and landlords often request them to verify your earnings. A pay stub contains all your income information, so it’s a great tool for tracking your salary, the taxes you’ve paid, insurance premium amounts, bonus information, and vacation and overtime pay. It’s important to save your pay stubs in case you need them for anything that requires income verification.

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