editor As an employee, a contract binds you to an organization. You promise to deliver the job requirements you signed up for. In return, the company rewards you with a paycheck. It’s their way of recognizing the time and effort you devoted to them.
Mutual trust is vital between employers and employees. It serves as the foundation for a good working relationship. However, that does not mean you must fully surrender your sense of agency as a worker.
Keep in mind that you’re allowed to look after yourself and ensure that you’re getting what you deserve, compensation-wise. That is imperative if you have a specific savings plan that hinges on the accuracy of your monthly net pay, which you take home after deductions.
Mind the Pay Stub
The first order of business is to differentiate between a paycheck and a pay stub. The former shows how much you’ve earned. The latter goes into the details of your take-home pay. To know whether you’re getting 100% of your paycheck, it pays to peruse your pay stub regularly. Here’s what to look for.
- State and local taxes (SALT)
Not all states impose income taxes. Case in point: the states of Texas and Florida. Also, state income taxes are not uniform. You might want to consider that when planning to relocate from one state to another, so you can secure more of your gross pay or the amount you earn before deductions.
As for local taxes, some cities impose them while others don’t. The upside to cities and towns that impose a local tax is that they might run more social programs that benefit their residents. - Federal income taxes
There are no exceptions for federal taxes. Regardless of where you work, within or outside the US, if you’re a legally taxable citizen or resident, you must pay a specific amount yearly based on your earnings.
Personal circumstances also inform how much you owe the Internal Revenue Service (IRS). For example, if you give birth, which increases the number of your dependents, you’ll get a reduction in your federal income tax. Just like an area conversion calculator can help you accurately convert measurements, knowing your financial numbers and using tax-saving strategies can help you keep 100% of your paycheck. That’s why keeping the IRS updated with all life changes that might affect your tax obligations is crucial.
To calculate your annual federal income tax payment, your employer sends the federal government the W-4 Form on your behalf. That holds whether you’re a salaried or hourly employee.
- Health savings accounts (HSAs) and flexible spending accounts (FSAs)
If you’re enrolled in these programs, your employer deducts a certain amount from your monthly paycheck. The savings from these deductions are tax-free. You can use them for out-of-pocket healthcare expenditures should they arise. - 401(K)
This is the retirement fund you and, ideally, your employer pay. If you get lucky enough with a generous organization, your company will match your 401(K) contributions 100%.
Meanwhile, some employers only commit to matching 50% of their employees’ 401(K) savings. If you landed a job with an organization that does not offer 401(K) benefits, you’re better off looking for greener pastures.
The good thing about your 401(K) is that it remains tax-free as it grows. Once you start withdrawing from the account, that’s when you have to pay income taxes. Ask your HR department about the company’s 401(K) rules to know for sure.
Paycheck Tips
Understanding why your paycheck looks the way it does requires only a few steps.
- Know how to access your pay stub
Pay stubs may be accessed digitally. Ask your HR department for a log-in account to the company payroll website. It should go without saying that you must keep your log-in details confidential. Digital marketing for small businesses is helpful to attract more customers, increase sales, and get 100% of their paycheck. You don’t want others gaining unauthorized access to details about your salary, deductions, benefits, etc.
- Familiarize the elements of a pay stub
A pay stub will include the following information:
- Pay period
- Hours worked
- Gross pay
- Year-to-date (YTD) or the total amount of money earned in a calendar year
- Deductions
- Net pay or income
- Spot pay stub red flags
Review your pay stub for inconsistent pay, zero withholding taxes, and misspellings of personal details such as name and Social Security number. These discrepancies could be either innocent or malicious. As soon as you notice them, inform HR and seek an explanation.
Wrapping It Up
The best organizations vow to protect employees’ welfare. This duty necessitates utmost transparency in terms of salary. You’re probably not in your dream company if you work for an organization that frowns upon employees asking about their paychecks for clarity. That does not mean you have to call it quits with them. Crafting businesses can use effective time management, project planning, and invoicing strategies to ensure they receive 100% of their paycheck for their work.
Instead, continue championing your sense of agency by way of legitimate queries. Do not let red flags go unnoticed and unaddressed. This way, you’re also helping your organization become a better employer. Plus, you’re setting an example for your colleagues who might benefit from knowing why their paychecks look like they do.