Understanding Paychecks
Where Does Your Money Go?
Pay Check Stub
Check Stub
-the part of a paycheck that lists deductions from your
salary
Personal Information
Personal Information:
• Name
• Social Security Number
• Address
Pay Period
Pay Period
– The length of time for which an employee’s wages are calculated; most
are weekly, bi-weekly, twice a month, or monthly
– The last day of the pay period is not always payday to allow a business
to accurately compute wages
Gross Pay
Gross Pay
– The total amount of an employee’s earnings BEFORE
deductions are taken out
• This is calculated by multiplying the number of hours worked by
the hourly rate
Net Pay
Net Pay
– The amount of a paycheck AFTER all deductions are
taken out (sometimes referred to as take home pay)
Deductions
Deduction
– The amount of money taken from an employee’s
gross pay for taxes, insurance, social security, and
other benefits
Required Deductions
Federal Withholding: taxes taken for federal funding
State Withholding: taxes taken for taxes for state funding
Social Security: retirement/disability benefits
Medicare: health care program for elderly/disabled
Income Tax: the part of earnings that people must legally give to the government to pay
for government services
Optional Deductions
(Medical) Insurance: Can get insurance through employer
401K: Personal retirement
Current vs. Year to Date
Current: the amount paid for each deduction THIS pay period
Year-to-Date: the amount paid for each deduction so far THIS YEAR
Pay Check Math
GROSS PAY: $1,533.33
TOTAL DEDUCATIONS: $250.35
NET PAY: $1,102.98