Understanding Your Pay Stub

How To Read an Earnings Statement

A pay stub shows how much you earned and how much was withheld for taxes and other deductions by your employer. While pay stubs may look different across companies, they all contain the same following information:

Earnings: This shows how your gross pay was calculated. It typically lists your hourly rate multiplied by the number of hours worked. Any overtime pay, bonuses, or additional earnings appear as separate line items.
Taxes and Mandatory Withholdings: This section lists legally required deductions that are taken out of your gross pay and sent to the government on your behalf. Examples include:

‒ Federal income tax (“FIT” or “FITW”)

‒ State income tax (“SIT” or “SITW”), if applicable

‒ FICA taxes for Social Security (often labeled “OASDI”) and Medicare

Benefits and Voluntary Deductions: These are deductions for programs you sign up for, such as your share of the health insurance premiums or your contributions to retirement programs (money you choose to automatically save for your future self).
Net Pay (Deposit): This is what you receive after all taxes and deductions are taken out of your earnings.

HARD LESSON

Hard Lesson - 8

u/AutoPilot_Failure • 2.2k points • 14 days ago

For two years, I never actually opened my PDF pay stub; I just waited for the direct deposit notification. Turns out, HR forgot to update my state tax withholding when I moved states. I didn't notice this until tax season, and I suddenly owed the new state $3,000 I didn't have. Trust me: Spend the 30 seconds to open the PDF and glance at the withholding lines every single payday.

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Gross vs. Net Income

FICA Taxes