Reading your Checkstubs: A Comprehensive Guide for Full-Time & Part-Time Employees

Budgeting and tracking your expenses against your income have become even more crucial in these stressful times than they were for previous generations. The paystub is a critical finance document to help you with this, detailing your income from various heads and showing the deductions made. This essential piece of paper – or digital file – is imperative for the tax season for employees and business owners.

While full-time workers typically get paystubs from their companies, part-time employees may have to generate their own. Even the former may sometimes need to use an online paystub generator as the law does not mandate all the states in the US to distribute checkstubs. Cases in point: Georgia and Florida.

Looking at the paystub can be exhausting, all the figures and abbreviations flustering for someone not accustomed to finance management and taxation laws. But it needn’t (and shouldn’t) be difficult to read a paystub. We have attempted to simplify things for professionals in various forms of employment, including contractors and remote workers.

Components of a Standard Paystub

Personal Information

The top section comprises employee details like name, address, Social Security Number, and pay period. It also contains the employer’s name and address. You will find these details in the header area.

Ensure the pay period is correct. It must include your regular work hours, overtime, etc. Inaccurate time-keeping resulting in missed payouts is shockingly common in the corporate world.

Income

The gross pay field shows you the total earnings before subtracting taxes and deductions. Likewise, the net pay tells you the earnings after these deductions.

Checkstubs track income from various sources, for example, bonuses, rewards, miscellaneous, and vacation pay (holiday payment). Some income heads you may come across are:

• Paid Sick Leave
• Bereavement (BRVMT)
• Contract pay (CNT)

You will earn from different clients as a freelancer or contract worker. We recommend selecting an advanced paystub template that shows your earnings in detail. At StubCheck.com, we offer a comprehensive template for specialized needs. Our enhanced template is available at $4.99 per paystub online.

Year-to-Date (YTD)

Under this, you can find your total income for the year till date. Paystubs show both the gross and the net value. More specifically, YTD is from the first day of the current financial year to the date the company issued the paystub. (As you probably know, the federal government observes the fiscal year from October 1 to September 30.)

It is a helpful metric to benchmark your earnings. It also assesses how your income has increased. It is a smart way to check if you are meeting your targets.

Deductions

A hefty portion of your paycheck goes into various deductions for taxes, social security policies, insurance, etc. The primary ones are:

• Taxes: You can get the net taxes deducted in the tax amount field. It clubs federal, state, and local deductions. States like Texas and Nevada exempt residents from paying state taxes But the federal tax applies to everyone, per the tax bracket they fit. Income tax pays off the national debt and funds defense programs, public goods (and services), transportation, law enforcement, etc.
• Social Security: It refers to funding for retirement provisions. These deductions go toward the FICA Social Security Tax. Presently, 6.2% of your income goes toward this program. The employer matches this sum, bringing the total to 12.4%. Self-employed professionals and freelancers must pay the whole amount as the employer’s contribution will be missing.
• Medicare: This deduction pertains to health benefits under the Federal Insurance Contributions Act. A total of 1.45% of your gross income goes toward Medicare. The employer also pays this percentage, making it a 2.9% contribution.
• State Disability Insurance: You will contribute toward this if you are eligible for Paid Family Leave and Disability Insurance.
• Voluntary: Here, you will see deductions you have opted to make, such as charitable donations, healthcare coverage, corporate life insurance, etc.
• Retirement Plans: This category includes payments towards 401(k) or Roth Individual Retirement Accounts (IRA).
• Others: You may see even more deductions on your paystub across months, like child support funds per court orders. Wage garnishments or employer-led deductions for credit card collections, alimony, etc., appear on paystubs. Another common field is payment for company merchandise like laptops, uniforms, work-related tools, etc.

Important Paystub Tips for the Self-Employed or Part-Time Employees

Contractors or freelancers are responsible for creating paystubs and using them to file taxes without errors. You should also build these documents if you work for tips, have a side hustle, etc.

• Check with your clients: Some companies can share checkstubs with their temporary and part-time workers. It wouldn’t harm to discuss it with your contact person. An official record on the letterhead can come in handy at multiple junctures, like applying for a new job.
• Use tools liberally: You don’t have a dedicated team to support you – an advantage employees enjoy. However, you do have automated tools. StubCheck.com can make it straightforward to build your payment records over time. We use the latest tax rates across states to ensure accuracy. Digital storage and easy access are more benefits that come with a free paystub maker.
• Double-check deductions: As an independent worker, your tax deductions will also include the employer’s share. Exercise caution while computing the corresponding amounts for Social Security and Medicare.
• Create paystubs on time for income proof: You may need these documents at any time, for example, while applying for a loan or a new credit card. Timely record-keeping always pays off.

More organizations are turning to automated tools for paystub generation to speed things up and minimize errors. Picking a reliable checkstub maker updated with the latest tax norms will help you have a hassle-free tax season. If you are a full-time employee frequently facing payroll concerns, it might be worth discussing things with the HR or finance teams. Digitization may be the best way forward.