What information is included in an earnings statement?
How can an employee read their earnings statement?
Why is an earnings statement important for tax purposes?
Earnings Statement
An earnings statement, often called a pay stub, is a detailed document that shows an employee's wages and deductions for a specific pay period.
What information is included in an earnings statement?
A typical earnings statement includes gross earnings and deductions, specifying the employee's net pay. Gross pay covers regular hours in addition to overtime and bonuses. Deductions include mandatory withholdings like federal income and state income tax, as well as Social Security and Medicare tax. The earnings statement also shows voluntary contributions to benefit or retirement plans. Some statements include year-to-date totals for tracking annual income and taxes.
How can an employee read their earnings statement?
An employee can start by checking the pay period dates and then looking at each section to verify the information. They should check that the net pay matches the deposit and note the year-to-date totals.
Why is an earnings statement important for tax purposes?
Earnings statements help employees track income and tax withholdings throughout the year, avoiding surprises at tax filing time. They confirm the information on W-2 Forms and serve as a backup in case of errors.
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