Whether you are the one receiving a paycheck or the one creating a paycheck, if you are not an accountant, a lot of confusion can come from trying to understand what paycheck stub abbreviations mean. Paycheck stub abbreviations are what keep the pay stub simple and easy to read at a glance, even with a lot of information on them. However, they also mean that you require a certain amount of knowledge to decode them; but it’s easy when you know how – so here are some of the most important paycheck stub abbreviations, as well as some tips for understanding what they all mean.
Usually, at the top of the check, you will see a header that contains the address of the company or employer, and the address of the employee. It will also contain the social security number of the recipient, the reporting period and pay date, as well as the number assigned to the check, this is also where you will find the first of many paycheck stub abbreviations. The reporting period refers to the period of work covered by this pay stub, sometimes also described as an earnings period. The income should reflect that period of time, usually (but not always, depending on your employer and position) two weeks, weekly, or monthly. The pay date is the day that you are receiving the check.
- SSN – Social Security Number
If you are the recipient, this is probably the part of the check that you are most concerned with. This will have the amount of money that you are actually receiving – but sometimes that can be unclear if you do not know what you are looking for. There will usually be two kinds of pay: gross pay and net pay. Here is what each means:
- Gross Pay: this is the total amount of income you earned during this pay period, before tax. This means that this is the amount that your employer paid before the taxes were deducted. As such, it may not be the same as what you are actually receiving. If you are a contractor or freelancer, however, and pay your taxes out of your own earnings, it may be the same.
- Net Pay: this is the amount of income you are actually receiving at this time, after tax. That means that the taxes have been deducted, and this number is the actual money in your pocket (or bank account).
Also in this part of the pay stub will likely be year-to-date fields, for both gross and net pay. This describes how much income you have received since the beginning of the calendar year, up to and including the pay period from the current pay stub.
- YTD – Year-To-Date
The other part of the paycheck concerns the various payroll deductions that may have taken place. These are usually for tax purposes, but in addition to tax deductions, there may also be deductions for insurance, retirement plans, leave time, childcare, or other employee benefits. The government tax withholdings may include the following payroll deduction abbreviations and requirements:
- FICA – Medicare: these are mandatory salary withholdings in which each employee pays 1.45% of their paycheck toward Medicare, and the employer also contributes 1.45%. The number in this field of the paycheck will reflect this.
- FICA – Social Security: as with Medicare, the social security tax is a mandatory withholding to contribute towards social security. The rate of money withheld may fluctuate, but for 2019 it is 6.3% of your paycheck.
- Federal Tax: your federal tax deduction is a standard income tax. The number here will vary depending on factors such as your tax bracket, and the number of exemptions you claim.
- State Tax: A state income tax will likely also be applied, though it does depend on your place of residence.
This part of the paycheck will also have a field for YTD deductions which, as with the other YTD fields, will reflect the total deductions received since the first day of the current calendar year. It is important for employees to pay close attention to the paycheck stub abbreviations in this section to ensure their deductions are calculated correctly.
Payroll Deduction Abbreviations Used:
- FICA – Federal Insurance Contributions Act
- YTD – Year-To-Date
- FL – Family Leave
- FWT – Federal Withholding Tax
- SWT – State Withholding Tax
- INS/MED – Insurance or Medical deductions
- 401k/Ret – Retirement contribution
Now that you are familiar with more of the most common pay stub acronyms and paycheck stub abbreviations, hopefully, the process of reading or creating a paycheck will be a lot easier, whether you are simply receiving them or in charge of an entire company’s payroll.
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