Once you have your first real job, you tend to pay more attention to everything that is on your paycheck. It is important to understand the break down of what is being withheld and what it is being used for. Checks may vary slightly from company to company, so if you have any additional questions, you can ask your human resources department. You should be aware that some companies run a month behind on paychecks, so any changes in hours, pay or benefits may be a month behind. When you get a raise you may not see as much as you thought in your take home pay. Understand your paycheck can help you understand why this happens.
1. Regular Pay
The amount that you were paid for the last pay period. This is the amount that you are paid before any pretax deductions. If you are on salary, this should be the amount that you were quoted. If you are paid hourly it should be equal to the number of hours you worked times your hourly wage.
2. Other Types of Pay
Near your regular pay box, you may see boxes labeled with overtime, holiday and sick pay. This can show the hours you have accrued, or that may come on a separate statement. This will list any of the hours that you used during this pay period. The overtime wage should be calculated at time and a half.
3. Federal Taxable Wages and Withholding
This is the amount of your paycheck that you are taxed on by the federal government. Your pretax deductions (medical and dental insurance, retirement and flexible spending accounts) should be subtracted from your regular pay to equal this amount. The withholding amount is the amount of taxes that you are having withheld.
4. State Taxable Wages and Withholding
The state taxable wages column shows the amount that your state will tax you on. The withholding column shows the amount that the state withheld. The state taxes will be on your net pay instead of yoru gross pay. If your state does not have income taxes, you will not see anything there.
5. FICA or OASDI Taxable Wages and Withholding
Some companies will refer to this tax as FICA (Federal Insurance Contributions Act) or as OASDI (Old Age, Survivors and Disability Insurance program). These are the same program. The money that is taken out is matched by your employer and paid into the social security system.
6. Miscellaneous Withholdings
You will see several smaller boxes that will be labeled with the various other deductions, which should include health insurance, retirement, and any cafeteria plan benefits that you may have signed up for. If you are paying for things such as your bus pass with your paycheck, it will be listed as well, though these items are not tax deductible.