How to Interpret a Pay Stub

Most people get them. A lot of people do not understand them. Pay stubs can be quite confusing if you aren't familiar with all the deductions and contributions that make up your paycheck. The form of the pay stub varies depending on the employer, but the individual categories of pay and deductions remain constant. Not everyone has the same deductions, so do not get too concerned if your pay stub doesn't look like another one.

Locate the "Earnings" section of the pay stub. Order of the columns may vary. The "Regular Pay" column contains the rate of pay, the hours worked, and may also list the workers' compensation code and the customer or job the work was done for. The workers' compensation code reflects the category of the job, which determines the amount of monthly payments the employer must pay to insure the employee.

Locate the "Overtime Rate." It should be listed even if you have not worked overtime in the current pay period. Employers can choose to make overtime either your hourly pay times one and a half, or your hourly pay times two.

Check for the word "salary" if you are not paid by the hour. If you are on salary, the hours column may or may not be blank. Other "Earnings" categories that may be included are: vacation pay, sick pay, and bonus pay.

Locate the federal withholding column in the "Employee Summary" section. It shows the amount of earnings that were withheld from your pay for the payment of income taxes.

Compare the "Social Security Employee" with the "Social Security Company" amounts. They should be identical. The company section details the contributions of the employer for both your social security and Medicare amounts and the amounts should match with those in the employee summary. Together, both the social security and Medicare contributions should equal 15.3 percent of your gross pay. The company section also lists contributions for federal and state unemployment. Each state has its own maximum contribution to unemployment, so if the amount column indicates zero, you have probably paid your maximum for the year. The employee section will also list the withholding for state income tax and disability insurance.

If you have chosen medical, life, dental or disability insurance, these amounts will be listed in the employee section. The amount of gross pay should be listed at the top of this column and the deductions should be located immediately underneath with the bottom line indicating the check amount.

Locate other columns not mentioned above. Among these may be the disability insurance or wage garnishments. The last column on the right of all of these rows may be labeled "YTD." This is the total amount for a particular row that has been paid for the current year, or from Jan. 1 of the tax year up to the pay period you are currently in.