www.www.worldexecutivesdigest.com| How To Create Your Own Paystub In 2020 | We must return to the basics of finance. Learn how to create your own paystub in 2020 and discover its intended use.
Have you ever applied for a loan or a credit card? You’re going to be asked about your income. It’s up to you to show how much money you make and why you should qualify for a loan.
About 82% of people get paid via direct deposit. For the most part, you probably don’t think much about a paystub until you’re asked about it.
What are your options when you need a paystub? Read on to learn how to create a paystub, and why they’re so important.
The Information on a Paystub
Believe it or not, your paystub has a lot of implications on your finances. The information contained there will tell you about your retirement, health plan, and how much you’ve paid in taxes.
Yes, there’s a lot on your paystub beyond what you made in the last pay period. Here are the most common things you’ll see on paystubs.
Pay Period: The pay period is the beginning and end dates that the paycheck covers. Your company may pay you weekly, monthly, or every other week. Pay attention to this to make sure that your pay period dates are accurate.
Gross Income: This is the total amount of money earned in the pay period.
Federal Taxes: The amount of money withheld for federal taxes. This can also be listed as FED or FIW.
State Taxes: If you live in a state with an income tax, you’ll see how much you paid in state taxes on this line item.
OASDI: This is also known as Social Security and Medicare, or FICA. This is a straight percentage of your earnings. You pay 1.45% for Medicare and 6.2% for Social Security. Your employer matches this amount when they pay payroll taxes.
401(k), IRA, or other retirement plans: If your employer offers a 401(k) plan that you contribute to, your amount withheld from your paycheck will appear here.
Insurance or Health Savings Account: Employers often offer health insurance and access to a health savings plan account as part of the benefits package. Your contributions will be listed here.
Wage Garnishments: There are times when you own money for child support or to the IRS. A wage garnishment is a legal instrument that creditors will use to get paid. Employers have to abide by these requests and withhold part of your earnings.
Net Pay: This is the final amount of money paid. It’s calculated by taking your gross pay and subtracting all of your taxes and contributions together. This is the amount that you should find in your bank account.
This is the most common information on a paystub. Some of these items may or may not apply to you.
Are Employers Required to Give Paystubs?
Now that you know what appears in a paystub, you might wonder why you don’t have one. Federal laws don’t tell employers that they have to give you a paystub. That’s largely up to states and labor laws.
It’s good practice for employers to keep good payroll records, though the law doesn’t require that. You may live in a state that doesn’t require employees to give paystubs.
These requirements tend to fall into three different categories. There are states that have no requirements for employers.
Other states tell employers that they have to give you access to your paystub, which can be electronic access. There are also states that mandate employers provide a printed copy of a paystub.
Whether or not you get a paystub is up to your employer and the state you reside in.
How to Create a Paystub for Yourself
Whether you live in a state that doesn’t require paystubs or not, you should know how to create your own paystub and the information on it.
It all comes down to empowerment. There are far-reaching implications that can impact you financially if you don’t know what to look for.
Last year was the first year people did their taxes after the Tax Cuts and Jobs Act went into effect. Most people knew that there was a tax cut of some sort, but they let their Federal tax withholdings continue as normal.
They were shocked to learn that they didn’t get a huge tax refund like they normally do. If they looked at their paystubs and adjusted their withholding rate, they would have avoided that scenario.
Here’s what you can do to learn how to make pay stubs. Go through a itemize the information that needs to be on your paystub that’s relevant to you.
You want to make sure that you include health insurance or retirement withholdings if they’re relevant. State, federal, and FICA taxes are mandatory.
Calculate Your Gross Pay
Your first step is to figure out how much your total pay is. You can multiply the hours work by the hourly rate or divide your salary by the number of pay periods.
Figure Out Taxes
You’ll need to refer to the IRS tax withholding to figure out how much you need to pay in federal taxes. The FICA taxes are easy since you’re dealing with a percentage of your gross pay.
State taxes are going to depend on your state. You may have no income taxes if you’re lucky.
Add Up Any Other Withholdings
You can finalize your paystub by calculating how much you pay in retirement, health insurance, or any other type of withholding.
Once you tally up all of your withholdings, subtract that amount from your gross pay to get your net pay.
Be Prepared to Create Paystubs
Paystubs are hugely important to determine your creditworthiness and your ability to get an apartment or a loan.
There may be times when you need a paystub in a hurry, which is why you want to know how you create a paystub for your own use.
You should educate yourself on the items on your paystub. You’ll be able to tell if you’re paying too little or too much in taxes.
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