Understanding Paystubs and Wage Statements: A Guide for Modern Employers
A paystub—or wage statement—is a fundamental document that outlines how an employee's earnings are distributed. Legal mandates in most jurisdictions require providing a detailed paystub detailing pre-tax and post-tax computations during periodic pay periods.
- ✓Gross Pay: The cumulative compensation earned before any taxes, retirement, or benefits deductions are withheld.
- ✓FICA Withholding: Fixed withholdings consisting of Social Security (6.2%) and Medicare (1.45%) taxes.
- ✓Net Pay: The actual "take-home" pay distributed directly to the employee after all authorized offsets are made.