Knowing how to verify your paycheck helps you to determine if your employer paid you the appropriate amount of wages for the pay period or if you were underpaid or overpaid. In the latter two instances, you can bring the matter to your employer -- in case he is unaware of it -- so he can correct the error promptly. Though a pay stub helps you to understand how you were paid, whether or not you receive one, you should know how to calculate your paycheck.
Multiply your regular, and if applicable, overtime hours by their respective pay rates. Multiply hours up to 40 for the workweek by your regular pay rate. If your job pays you time and a half for overtime, multiply any hours exceeding 40 by 1 1/2 times your regular pay rate. The combined total equals your gross wages. If you received additional pay, such as a bonus, with your regular paycheck add it to your gross wages.
Divide your yearly salary by the number of pay periods to arrive at your salary for the pay period, if you are a salaried employee. For example, a weekly payroll has 52 pay periods, a biweekly payroll has 26 and a semimonthly payroll has 24. Add any additional pay you receive in the same check to arrive at your gross salary.
Subtract pretax deductions from your gross wages, if applicable. For example, a Section 125 medical plan is not subject to Medicare tax, Social Security tax and federal income tax. Consult your state revenue agency -- or ask your employer -- for pretax deductions that are excluded from state and local income tax. Deducting pretax deductions from your gross pay lowers your taxable income.
Deduct payroll taxes. Use IRS Circular E and your W-4 to calculate your federal income tax withholding; for example, see page 38 of the 2011 Circular E. In 2011, calculate Social Security tax at 4.2 percent of your taxable wages, up to $106,800 for the year, and Medicare tax at 1.45 percent of all your taxable compensation. Use your state’s guidelines for state and local income tax withholding, if applicable.
Subtract wage garnishment, if applicable. A wage garnishment is based on your disposable income, your earnings after legally required deductions, such as federal income tax and Social Security and Medicare taxes, are withheld.
Deduct post-tax deductions -- deductions that are not pretax, such as a health benefit that does not qualify as a Section 125 plan. The rest of your pay is your take-home pay.
If your employer does not give you a pay stub, it’s probably because state law does not require it. Otherwise, you are entitled to one. Contact your state labor department if your employer refuses to give you a pay stub and is required to. If you were underpaid, give your employer a chance to correct the error. If your employer refuses to comply, file a wage claim with your state labor department or the U.S. Department of Labor, Wage and Hour Division. You can use an online paycheck calculator to calculate or double-check your paycheck.