How To Read a Pay Stub

Because the parent company’s stock may retain most of the attractive characteristics of the original investment, stub stocks are not typically viewed as desirable by investors. Again, employer contributions should be listed for both the individual pay period and the total contributions for year-to-date. “Gross wages” refers to an employee’s full pay before taxes and other deductions.

A pay stub, also known as a check stub, is the part of a paycheck or a separate document that lists details about the employee’s pay. It itemizes the wages earned for the pay period and year-to-date payroll information. The check stub also shows taxes and other deductions taken out of an employee’s earnings. And, the pay stub shows the amount the employee actually receives (i.e., net pay). When you issue pay stubs through your payroll service every pay period, you can easily track your employees’ hours, pay, taxes, and deductions. In addition, paystubs will often include other payroll deductions such as insurance, or health savings and flexible spending accounts which allow individuals to put money aside for health and medical expenses.

How Do You Make a Pay Stub?

The Law Dictionary is not a law firm, and this page does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction. Omnipresent makes it easy to hire, pay, and support your international team. Deductions could also include charitable contributions, payments toward loans, and any other voluntary or involuntary deductions (e.g., child support). List each deduction on its own line, and show current and year-to-date totals.

If an employee received benefits or has completed overtime, this should also be included. If you’re an employee, you can usually access pay stubs via email or through your company’s payroll portal if they have one. If you use payroll software, you should be able to access your employees’ pay stubs online through the payroll system. For example, there’s no federal law mandating the use of pay stubs in the US, but certain states require them. If you don’t comply with local laws and regulations, you may incur fines or legal action. Check with your state to see if there are any other employer-paid taxes you must pay and include on employee pay stubs.

Employer Taxes & Contributions

If the employee receives nontaxable income, include that income after subtracting all taxes and deductions. Gross wages are how much money you owe an employee before you take out any taxes and deductions. If an employee has any nontaxable income, you must also include it under gross wages. Pay stubs are important documents that give employees transparency in how they are getting paid. It also gives year-to-date information so that the employee can see how they are doing for the entire year.

The IRS also offers a free tax withholding estimator tool, linked above, to help you avoid paying more at tax time. Employers may also make deductions for things like insurance premiums or loans that the employee benefits from. Kimberlee Leonard has taken her professional experience as an insurance agency owner and financial advisor and translated that into a finance writing career that helps business owners and professionals succeed. Her work https://www.bookstime.com/articles/what-is-a-pay-stub has appeared on Business.com, Business News Daily, FitSmallBusiness.com, CentsibleMoney.com, and Kin Insurance. All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional.

Pay Stub FAQs

It is vital for companies to verify whether pay stubs are required in the place they are conducting business, along with ensuring the paychecks satisfy the rules. They may also show other employee information such as the amount of vacation time owed or used. Pay stubs are also known as payslips, paycheck stubs, or pay advice. A check https://www.bookstime.com/ stub is attached to a check, and provides the detail regarding the amount paid. The contents of a check stub typically include the invoice number paid and the amount paid, which sums to a grand total paid. Just like gross wages, information on deductions should be included for both the individual pay period and year-to-date.

• List each contribution on its own line with current and year-to-date totals.
• Kimberlee Leonard has taken her professional experience as an insurance agency owner and financial advisor and translated that into a finance writing career that helps business owners and professionals succeed.
• The IRS also offers a free tax withholding estimator tool, linked above, to help you avoid paying more at tax time.
• Pay stubs should outline things such as tax withholdings, health insurance payments and retirement funding.
• Companies must therefore understand that requirements for paychecks will vary depending on the country.
• In fact, independent contractors and employees must be treated separately.

You can use special payroll software to generate professional-looking paycheck stubs for your employees. There are many free tools available, as well as premium packages. Employers often have their own payroll taxes and contributions to pay.

Pay Stub Definition

While some jurisdictions do require employers to provide their employees with pay stubs, others don’t. If you’re hiring international talent, you need to know what’s required by law in each country or state your employees work from. The information you must include on a paycheck stub can also vary by state. For international employers, it is important to be aware of the rules for the countries in which they operate. For instance, in some countries, holiday bonuses, or ‘13th month pay‘ are required by law and in others, holiday bonuses are discretionary. Companies must therefore understand that requirements for paychecks will vary depending on the country.

The information on this page is for informational purposes only and is not to be construed as legal advice. Payslips can also be useful for preventing and resolving disputes between the employee and the employer about pay. An independent contractor is someone who provides a service(s) to multiple clients and is paid based on the particular service they provide. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance.