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Toss Your Paystub Every Week? Maybe It’s Time To Take a Closer Look

What you do with your paystub often depends on how you get paid. If you have direct deposit there’s a good chance that you just rip the entire thing up without a glance, confident in the fact that the money is in your bank account and all is good in your world. If you deposit your check, you probably rip off the bottom without a glance and toss it on your way into the bank or at the drive-through window. But the fact that you’ve been paid doesn’t mean that the information on your paystub isn’t important. There are good reasons for taking a closer look at the information that’s provided, and for understanding what it all means.

The most important reason to double-check your paystub is to make sure that you’re being paid correctly and that the right amount of money is being withheld on your behalf by your employer. You know better than anybody what your income is supposed to be, and mistakes do happen, but you won’t know if you don’t check. Plenty of people have found out the hard way – at tax time – that their employer hasn’t been withholding the amount that they wanted them to, and they end up with a shortfall that they have to make up.

Another good reason for looking at your paystub is to understand exactly where your money is going and what it is funding. We all remember the shock of receiving our first paycheck and finding out that it came to far less than what we thought it would be based on our salary or hourly wages. We were told it was taxes … but do you know what that really means? The information provided below should provide a better understanding of what those deductions from your gross income are, and where they are going.

Breakdown of Paystub Information:

Unfortunately, there is no one set format for paystubs. In fact, some states don’t even require employers to provide their employees with the specifics of where their money is going each week. For those who do receive paper records of their withholding amounts and more, here’s what you’re likely to find, and what it means.

  • Wages – This is one of the most important pieces of information on your paystub. Whether you are paid a salary or an hourly basis, the wage portion of your paystub will provide you with what the gross amount is that you’re being paid, what portion of those wages are taxable, and what your net income/check amount is. Most stubs will reflect both the wages for the pay period and the year-to-date totals.

  • Taxes – Every citizen is obligated to pay a portion of their income to the federal government, as well as any applicable state and local taxes. This money is used to pay for both services and administrative costs. Deductions will also be taken for the FICA tax that pays into the Social Security Administration and Medicare. Though the taxpayer may not currently be benefiting from these programs, the idea is that everybody will be eventually, and those who are working pay for those who no longer are.

  • Non-Taxed Deductions – Most paystubs will also reflect deductions taken from your pay for items that are not taxable. This may include contributions to a 401(k) retirement account or money that you direct into other pre-tax accounts.

  • Benefits – If you receive benefits such as health insurance, life insurance, sick time, and vacation time, your employer may provide information on your paystub about how much they pay on your behalf, or how much you have elected to pay for options such as a specific level of insurance coverage.

  • Additional Deductions – You may also see deductions taken for other items that you have requested, such as Health Savings Account contributions, parking passes, childcare expenses, and more. All of these line items should be for selections that you have agreed to. If you do not recognize an expense, it’s a good idea to check with your Human Resources department and ask them to identify it.

Knowing what you’re earning and where your money goes is just the first step to economic stability and understanding. For additional help and guidance, contact our office today.

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Get to Know Prestige Accounting Services Group (previously Prestige Wealth Accounting Group)

Offices in Flemington, NJ and Califon, NJ

Our Mission: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we are on a mission to redefine the tax experience for individuals and small businesses. With a focus on personalized service, strategic planning, and expert guidance, we aim to empower our clients to succeed financially with confidence and ease.

Expertise in Action: With a wealth of experience and a team of dedicated professionals, we specialize in individual and small business tax preparation. While we excel in all areas of taxation, our passion lies in serving the unique needs of small business owners in New Jersey. We understand that small business taxation requires specialized knowledge and attention to detail, which is why we go above and beyond to ensure our clients receive the guidance and support they deserve.

Tailored Solutions for Every Client: Whether you're a high-net-worth individual seeking comprehensive tax planning or a small business owner in need of accounting and bookkeeping assistance, we have the expertise to meet your needs. Our team takes the time to understand your specific situation and develop customized solutions that align with your goals and objectives.

Why Choose Us?: What sets us apart from other New Jersey tax firms is our commitment to excellence and innovation in the field of taxation. We don't just prepare tax returns; we provide strategic insights, proactive planning, and actionable advice to help our clients achieve their financial goals. With a team of two CPAs, an EA, and an ERO, we have the expertise and resources to deliver exceptional service and results.

Your Success is Our Priority: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we measure our success by the success of our clients. We are dedicated to building long-lasting relationships, providing unparalleled service, and helping our clients thrive in today's ever-changing tax landscape.

We can't wait for you to experience the Prestige Accounting Services Group (previously Prestige Wealth Accounting Group) difference.

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