Lesson 17: Interpreting Paystubs

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Activity: Interpreting Paystubs

Key Considerations

The first paycheck you receive from your job will be exciting! Being compensated for your hard work is a good feeling. Your paycheck will have two parts, the check and a paystub. The paystub contains important information you will need to actively review for accuracy each time you are paid. Reporting mistakes on your paystub will be easier to fix if caught sooner rather than later.

Directions

Refer to Money Management Lesson 5: Understanding Paychecks to acquaint yourself with pay periods, withholdings, and deductions.

Refer to the sample earnings statement below to familiarize the components and vocabulary associated with a pay stub. As you review the sample earnings statement, there are some components that will not be on your first paycheck because you may hold a job that does not include benefits such as a retirement plan.

Sample Earnings Statement

Download the Sample Earnings Statement to complete this assignment.

  1. Pay Period: What is the pay period of the sample earnings statement?

  2. Federal Withholdings Tax: How much federal income tax was withheld from the sample earnings statement?

  3. State Income Tax: Do you live in a state that requires a percentage of your income for state-run projects and programs?

  4. Federal Insurance Contributions Act (FICA): What two taxes is FICA required to fund? How much FICA tax was withheld from the sample earnings statement?

  5. Gross Pay: This is your salary or wages earned before withholdings. What is the gross pay on the sample earnings statement? Remember, this is the amount of money the employee earned before any taxes were withheld.

  6. Net Pay: This is the portion of your salary received after withholdings have been taken. This is often called your take-home pay. In the sample earnings statement, the take-home pay for the pay period is $1,570.

  7. Short-Term Disability: How much money was contributed to short-term disability for this pay period?

  8. Life Insurance: How much money was contributed to life insurance for this pay period?

  9. Health Savings Account: How much money was contributed to the health savings account for this pay period?

  10. 401K: How much money was contributed to the 401K for this pay period?