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How To Read A Paycheck

As someone who regularly processes payroll for a small business, I am continuously asked “Did I get paid my bonus?” or “Where is my per diem for the week?” I’m going to show you how to read a paycheck (specifically, my hubby’s paycheck) and understand each part so you can recognize if you’re getting paid the correct amount in you own paycheck.

Pay Period

The pay period is the length of time he’s getting paid for.

PayPeriod - Paycheck

The normal pay period is either one or two weeks. If it’s a weekly, you’re paid every week, and if it’s two weeks, you’re paid biweekly. In this case, it’s weekly, for the period of Sunday 12/9/18 to Saturday 12/15/18.


The earnings are the gross amount of the employees’ regular hours worked.

Earnings - Paycheck

Here, he earned $166.86 for working whatever hours he worked (which I blacked out for confidentiality) during the week 12/9/18 to 12/15/18. It’s calculated by the number of hours X his pay per hour. So if he earned a bonus of $100 in addition to the $166.86, it would be listed here as a second line underneath the $166.86.

Optional Additions and Deductions

Common optional deductions are 401K contributions, insurances (like health, vision, life, etc.), union dues, charitable contributions, Paid Family Leave, and garnishments like child support.

OptionalDeductions - Paycheck

Here my hubby contributes to his 401K ($16.69) and pays for NY Paid Family Leave ($0.21).

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You can calculate that he contributes 10% to his 401K, as 10% of his gross earnings for the pay period, $166.86, is $16.69.

Optional deductions include reimbursements and allowances, of which my hubby has neither.

Paid Time Off

In the paid time off section, my hubby has sick time and vacation time.

PaidTimeOffAccrued - Paycheck


It’s not common for his sick time to be negative (-2.33 hours), which tells me that there is a mistake in his sick time calculation. It should never be less than zero. Anything less than zero means he doesn’t have any more sick time.

He also has 57.13 hours of vacation time, which is equal to more than 7 days of vacation. This number will go down as he uses his vacation time.

Paycheck Withholdings

The paycheck withholdings are the taxes you pay for working. These withholdings are directly out of this specific paycheck. Federal are income taxes that go straight to the IRS. State are the income taxes that go to your state. City are the income taxes that go to your city. Not all states and cities have income taxes, such as Florida.

PaycheckWithholdings - Paycheck

And if you’re paycheck is low enough, as it is here, you may not have to pay taxes on your weekly pay at all. In other words, $166.86 in gross earnings for this pay period is low enough that there weren’t any federal or state taxes taken out. And there aren’t any city income taxes in my area.

FICA stands for Federal Insurance Contribution Act, which is basically your social security tax and medicare tax, although on this paycheck, FICA is my hubby’s social security taxes with a separate box for his Medicare taxes. The social security taxes rate is 6.2%, which is why his FICA amount is $10.34 ($166.86 X 6.2%). The Medicare taxes rate is 1.45%, which is why his Medicare Tax is $2.42 ($166.86 X 1.45%).

The final withholding on my hubby’s paycheck is the DIS-SUI, which is the state disability and state unemployment taxes, for $0.60. Not all states have state disability and unemployment taxes.

Net Pay

The net pay for this paycheck is $136.60.

NetPayPeriod - Paycheck

That is the amount of money from his gross earnings of $166.86 that my hubby gets to actually deposit from this paycheck. It’s calculated by deducting from his gross earnings all the optional deductions and withholdings, $166.86 gross earnings – $16.69 401K – $0.21 NYPFL – $10.34 FICA – $2.42 Medicare Tax – $0.60 DIS-SUI = $136.60.

Year To Date

The last row of numbers on his paycheck are the year to date (YTD) amounts. It’s the total amount in each category from the beginning of the year until the date of the check.

TaxesYTD - Paycheck

So from January 1, 2018 until December 15, 2018, he’s paid $741.60 in federal income taxes, $542.86 in state income taxes, $1169.21 in FICA, $273.44 in Medicare Tax, and $28.98 in state unemployment insurance out of his YTD gross pay of $11,539.17.

And that’s how you read a basic paycheck. This paycheck is fairly easy to read, as the only item paid was his regular shift and there were only two optional deductions (401K and NY Paid Family Leave). When your job industry becomes more complex, like in the construction industry where you may work multiple wage rates (called prevailing wage), your pay stub can get really confusing.

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And every employer’s pay stub looks different.

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