A paystub is a very necessary document that employees receive at the end of every month. They are issued by an employer and detail what an employee has earned for the period stated on the said paystub. Generally speaking, any document that comes attached with a paycheck could be considered a paystub.
But getting into more detail, a paystub is a monthly report that is issued with a paycheck and details things like earnings, tax paid, deductions, and any other contributions made and received by an employee.
In this article, we are going to satisfy your inquiring mind and answer some of the most frequently asked questions about paystubs. This information should set your mind at ease, and leave you feeling more confident and knowledgeable about your paystub and how to use it.
What Information Should be Found on a Paystub?
A paystub reports on an employee’s basic monetary activities for a month and includes an employee’s basic information. The information presented includes; gross monthly income, monthly deductions, amount of tax paid for the month, net income received (after deductions), any medical deductions and contributions, as well as year-to-date (YTD) information.
This year-to-date information is merely an accumulation of the income and deductions for the year thus far. Other information that is presented on a paystub includes an employee’s basic details, such as their name, the name of their employer, any sick leave or holiday they have accumulated so far, as well as any back pay that they may be entitled to.
What is Gross Pay?
Gross pay is the amount an employee receives before any deduction has been taken off. For example, if you earn $10 an hour and work for 40 hours, the gross pay is $400.
What is Net Pay?
Net pay is the amount that an employee takes home at the end of the month. Essentially this is the gross pay amount minus any deductions, such as medical cover and tax that has been paid on the employee’s behalf.
Why Do You Need a Paystub?
Most importantly, a paystub allows an employee to track their earnings from an employer and ensure that there are no discrepancies when it comes to tax and other deductions. Furthermore, a paystub helps people to apply for finance and secure any loans that they may be applying for. This includes home and vehicle finance.
Why is the State and Federal Tax Amount $0?
This could be due to the fact that no tax will be deducted from an employee’s earnings if they do not meet the minimum earnings for tax requirements. Tax will only be deducted once the minimum earnings threshold has been reached.
Who Produces a Paystub?
Paystubs are created by payroll through the use of paystub generation software, such as that which can be found at https://www.thepaystubs.com/. They are created by professionals to ensure that all the information presented is correct and in line with any government requirements.
Paystubs are an essential document that benefits both employers and employees and are a necessity for transparency purposes, as well as helping employees to understand what they earn as well as their tax liability at the end of the tax season.