Although the requirements of states for pay stubs are subject to change however, most pay stubs contain the following information:
The company’s details for the employer company name and address.
Personal information of an employee Name address, name and address, and Social Security Number.
Pay cycle The amount of payroll periods decides the amount of salary is paid every payroll date. It also determines the starting and the end of days to calculate the hourly pay.
Wages Pay: Gross earnings and net. They can be dependent on a salary or calculated with an hourly rate pay.
Hours worked or hourly rates of compensation (straight time and overtime) (if applicable)
Withholdings from taxes (Federal, State and possibly local taxes that are withheld to pay taxes.
Benefit Withholdings are the amounts withheld to pay the employee’s portion of insurance premiums, or money to be put into retirement plans.
Here are more details on essential pay stub components:
Gross wage
The wages earned prior to any deductions or withholdings are subtracted. The gross wages for a pay period are calculated using one of two methods:
Salary employee: (Annual salary / the number of pay periods within the course of a year)
HR employees who are hourly: (Hours worked X pay rate per hour)
Gross wages can also include additional compensation such as holiday pay, sick pay or bonuses.
Pay rate, hours worked
The number of hours worked is especially important in the case of non-exempt (hourly) employees. The pay stub must include normal working hours (up at 40 hours per workweek) and overtime hours.
The pay stub should include all hours worked and the amount earned per hour. Some workers, like those that have covered under union contracts, have required to paid a certain amount of money for overtime hours or double-time hours.
Salaried workers might also see the hours they earn on pay statements.
Tax deductions
Workers calculate their federal income tax withholding amounts by filling out Form W-4. Every state has its own Tax Withholding Form.
FICA tax has used to fund Social Security and Medicare. For 2020, the employer tax on Social Security is 6.2% on earnings between $137 and $700. In 2020, the Medicare tax is 1.45 percent on all wages and taxpayers with high incomes have to pay an additional 0.9 percent tax on Medicare. In total, the worker FICA tax rate will be 7.65 percent in 2020.
Employers have also required to pay 7.65 percent of the salary for the service, which is included as a business expense. The payments of the employer are generally listed on the pay check.
Benefit deductions
Employees typically pay a portion of the premiums paid for the health insurance provided by their employer and can contribute to retirement plans, for example, the 401(k) scheme. 401(k) contribution are paid using pre-tax funds and the employer can include match contributions.
Taxes on unemployment
Unemployment programs have financed by taxes such as the FUTA tax (federal) as well as taxes like the SUTA tax (state). These funds will be paid to the employers however, they are also listed on the pay check.
Net pay
Net pay refers to the amount of dollars that have paid to the employee after deductions.
This is an illustration of how you can calculate net pay:
Calculating Net Pay
The annual income of Sally is $60,000 and her employer handles payroll every 26 weeks (every for two weeks). Sally’s wages gross for during each pay period are ($60,000 (60,000 x 26) that is $2,308 per pay period.
According to the allocations shown on the W-4, your business must withhold 20 percent of the total pay ($462) to pay federal taxes and five percent ($115) to pay state tax. Sally has also required to pay $50 per pay period to cover her portion of the health insurance plan offered by the company. plan.
Sally’s net earnings are $2,308, with a sum of $577 in taxes and $50 for medical insurance costs. Her net pay is $1,681.
The pay stub should contain all the information listed above for the current period of payroll and the year-to-date. Pay stubs generated by you could also contain unemployment tax refunds. Hourly workers must provide details on their hours of work, as well as any hours paid overtime.
