Reading your first pay stub

Your first paycheck usually comes with a stub that lists every amount taken out along the way. This page walks through each line so you can check that your hours, your rate and your withholding look right.

Gross pay and net pay

Gross pay is what you earned before anything was taken out, which is your hours multiplied by your hourly rate, plus any overtime or other pay. Net pay is what actually lands in your bank account. The lines between the two explain the difference.

Start by checking the hours. Compare them with your own record of the shifts you worked in that pay period, and make sure the hourly rate matches your offer. Payroll mistakes happen, and they are fixed faster when you report them right away.

Taxes taken out

Federal income tax withholding is an advance payment toward the tax you may owe for the year. Many states and some cities withhold their own income tax as well. When you file a tax return, the amount withheld is compared with what you actually owe, and any extra comes back to you as a refund.

Social Security and Medicare appear as separate lines, sometimes labeled FICA. Students who work for the college they attend while enrolled and taking classes are often exempt from these two taxes. The payroll office applies that rule, so ask there if the lines appear on a campus paycheck.

Each payday, check

• Hours match your own record
• The hourly rate matches your offer
• Withholding looks consistent with past stubs
• Any deduction you did not expect

How the W-4 sets your withholding

The W-4 you completed when you were hired tells your employer how much federal tax to hold back. The current form asks about your filing status, other jobs, dependents and other income, rather than asking you to count allowances. If you hold two jobs at once, the form has a step for that, and skipping it can leave too little withheld.

Some students can claim an exemption from federal withholding if they owed no federal income tax last year and expect to owe none this year. That claim lasts for one calendar year and has to be renewed with a new W-4. The Tax Withholding Estimator on the IRS website helps you decide what to enter.

Other lines you may see

Your stub may show deductions for a retirement plan, health coverage, a parking permit or a uniform. Year-to-date columns add up each amount since January, which makes totals easier to check later. Keep your stubs until your W-2 arrives early the next year and you have confirmed that the numbers match.

When a deduction appears that you did not agree to, ask the payroll office what it is for. Many state labor laws limit what an employer may take out of wages without written permission.