When I was 11 years old, I discovered pay stubs strewn about in my brother’s car. I’d never seen pay stubs before and they looked really official. I asked if they should be kept somewhere safe and he said they weren’t important – not like the cash in his pocket. Even then, his answer didn’t seem correct.
Now, I KNOW his answer wasn’t correct. Teresa Ray from The Payroll Department in Brownsburg understands the importance of pay stubs and why employees should review them every payroll period.
Review Wage, Benefit Payroll Taxes and Deduction Information
Even with professional payroll services like The Payroll Department, information received from employers can have errors from HR deciphering handwriting or data entry. Employees should take time to:
- Check the number of hours worked and the pay rate are correct.
- Confirm the amount of time off including sick days, vacation days, holidays or other paid time. Both the time used that pay period and accrued time remaining should be noted.
- Verify all amounts deducted from the gross earnings are itemized for both the current pay period and the total accrued year-to-date. Deductions can include:
- city, state and federal income taxes
- FICA (Social Security and Medicare)
- Insurance (medical, life, disability)
- retirement or 401K deposits
- loan payments
- automatic savings deposits
- uniform fees
- union dues
Employees can see the deductions being claimed (e.g., married – 3) and the amount of payroll taxes accumulating. They can estimate how much will be accumulated by the end of the year and change the deductions being claimed if necessary. Pay stubs also provide documentation about work expenses that can, in some cases, be itemized deductions on tax returns.
Correct Payroll Errors or Make Changes Right Away
Confirming information each pay period means errors and omissions get corrected immediately. The year-to-date totals shown on the last pay stub for the calendar year should match the information on the IRS W-2 form used to file income tax returns. If a problem isn’t addressed until that form is received from their workplace, making changes could delay filing the tax return.
Besides checking for accuracy, reviewing pay stubs lets employees see where every penny of income from their employment is going, allowing them to budget and take advantage of tax deductions. It’s a really good habit to have.
-Elaine of The Payroll Department Blog Team