When you get a job, you will agree on the rate you will be paid for a given period of work. Once you get your first payment, you may be confused when the amount is less than what you expected. You may assume that your employer is scamming you. Seek resources that will help you discover more on how the pay stub is structured. It is wise you learn how the final amount of money you get as salary is derived at. Read more now to see the four key things to review when you receive your paycheck.
The gross pay is usually the first item on your paycheck, and you should start by understanding. The gross pay is generally the amount stated in your work contract. Hence, it is your pay before the tax and other deductions. The gross pay will include your hourly rate multiplied by the number of hours you have worked, allowances, tips, and bonuses. It smart you learn more on how your gross pay determines the taxes you are charged. The idea is to learn more about the taxation brackets and find which group you belong to depending on your gross pay.
The next thing to check is the net pay, which is the amount that you take home. To calculate net pay, subtract, tax, and deductions from the gross pay. You should, therefore, carefully review each item before the net pay to ensure that it is accurate. Understand an error in the deductions may lead you to get more or less net pay than required. Therefore, make it a habit of examining all the items on your paycheck.
Learn how the compulsory deductions work to make it easy to understand your pay stub. Given that deductions reduce the money you take home, you may wish it is possible to avoid all of them. The challenge is that the law requires you to pay tax, medicare, and social security. It is wise to discover more about the rate of each of these mandatory deductions. Ensure that your employer is remitting these deductions on the agreed time. The goal is to avoid any legal issues by complying with the set regulations.
It is also wise you seek more info about the voluntary deductions in your paycheck. To avoid money temptations, you may choose to have certain expenses subtracted from your pay before you receive it. Hence, you are the one guiding the employer on how to handle these voluntary deductions.
Therefore, it is your responsibility to examine each paycheck you receive to ensure that it does not have any errors.