Why reading your paystub matters

Your paystub is more than confirmation you were paid. It’s the official itemization of how each paycheck was calculated — gross pay, withholdings for federal and state taxes, Social Security and Medicare, pre‑ and post‑tax benefits, and voluntary deductions. Errors on a paystub can affect tax withholding, benefits eligibility, loan underwriting, and long‑term savings like Social Security credits. (IRS, w‑4 guidance: https://www.irs.gov/forms‑pubs/about‑form‑w‑4)

In my practice reviewing employee paystubs, the most common issues are wrong hours, mistaken benefit deductions, and outdated withholding instructions. Catching these early prevents surprise tax bills, missed contributions, or incorrect income reported to lenders.

Quick anatomy: what each main section means

  • Gross pay: Total earnings before deductions. This can include regular wages, overtime, commissions, bonuses, and taxable reimbursements.
  • Hours/rate or salary code: For hourly workers, check hours worked and overtime calculations; for salaried staff, verify the pay period and salary prorating when you start or leave a job.
  • Year‑to‑date (YTD) totals: Cumulative amounts for earnings and deductions for the calendar year — vital when you reconcile paystubs to your W‑2 at year end.
  • Taxes: Federal income tax withholding (based on your W‑4), state and local taxes (if applicable), Social Security (OASDI), and Medicare (HI). The paystub will list each tax separately.
  • Pre‑tax benefit deductions: Items taken out of gross pay before taxes, such as 401(k) contributions, health‑insurance premiums, FSA/HSA contributions, and commuter benefits. These reduce taxable income.
  • Post‑tax deductions: Voluntary after‑tax items like Roth 401(k), certain insurance premiums, union dues, charitable payroll giving, or wage garnishments.
  • Employer contributions: Not always shown as cash, but often listed for employer 401(k) matches or health‑plan employer contributions — useful to understand total compensation.
  • Net pay: The take‑home amount after all deductions.

Common paystub items and what to check closely

  1. Earnings detail vs. contract or offer letter
  • Confirm pay rate, hours, and overtime pay align with your employment agreement. Look for incorrect hourly rates or miscounted overtime.
  1. Federal and state withholding
  1. Social Security and Medicare entries
  • Check that OASDI and Medicare are listed and are being withheld; these provide Social Security credits and determine Medicare eligibility (SSA: https://www.ssa.gov).
  1. Pre‑tax retirement and health deductions
  • Verify 401(k) and HSA/FSA contributions match elections and that pre‑tax status is applied correctly (pre‑tax lowers taxable wages).
  1. Employer contributions and matching
  • Confirm employer 401(k) match or other benefits appear if your plan requires employee contributions to trigger a match.
  1. Voluntary deductions and garnishments
  • Ensure any voluntary benefits were authorized and that garnishments (if present) follow court orders and legal limits.
  1. Year‑to‑date totals
  • Compare YTD earnings and taxes with what you remember being paid; large discrepancies often indicate earlier errors.

Step‑by‑step checklist to review each paystub (2–3 minutes)

  1. Verify your identity and pay period dates at the top of the stub.
  2. Confirm gross pay, hours, and rates. For salaried employees, check prorated amounts if you changed roles mid‑period.
  3. Reconcile tax withholdings to your latest W‑4 choices.
  4. Check pre‑tax deductions (401(k), HSA, premium) for correct amounts and tax treatment.
  5. Confirm post‑tax deductions and any one‑time items (bonuses, reimbursements).
  6. Verify employer contributions are recorded if expected.
  7. Review net pay and compare against your bank deposit.
  8. Save the stub to your records (digital or paper) and note any anomalies.

What to do if you find an error

  1. Document the issue: take screenshots, save the paystub PDF, and note dates and the specific line items in question.
  2. Contact payroll or HR promptly: provide a clear summary and ask for correction timeline. A short, professional script works well: “I reviewed my paycheck for [pay period date]. My YTD earnings/deduction for [item] looks incorrect. Can you confirm and advise on next steps and timing?”
  3. Follow up in writing: email the payroll contact so there’s a record. Include copies of your paystub and any supporting documents (timesheets, offer letter).
  4. Escalate if unresolved: if payroll doesn’t correct mistakes or won’t respond, escalate to HR manager or your state’s labor department for wage disputes. See state labor agency resources on your state government site.
  5. Tax implications: if an error affects tax withholding or year‑end W‑2, confirm payroll will issue a corrected W‑2 (Form W‑2c) and understand how to report corrected amounts when filing taxes.

If the mistake involves withholding mistakes that persist, see our related guide on correcting withholding and W‑2 errors for next steps: Employer Withholding Mistakes: How to Correct W‑2 and Withholding Errors.

Special cases and what to watch for

  • Bonuses and supplemental wages: Payroll may withhold federal income tax differently on bonuses; verify the amount and how it was taxed.
  • Overtime and shift differentials: Ensure OT hours are calculated at the right rate and that premium pay was applied.
  • Reimbursements and expense pay: Confirm whether reimbursements are taxable or non‑taxable; non‑taxable reimbursements shouldn’t increase taxable wages.
  • Contractors and gig workers: Independent contractors typically don’t receive a paystub but should keep invoices and 1099‑NEC forms. See our note on income for loan eligibility: What Counts as Income for Loan Eligibility: Paystubs vs Bank Statements.

Recordkeeping: how long to keep paystubs and why

Keep paystubs until you receive and reconcile your annual W‑2 (for employees) and then retain a copy with your tax records for at least three years from the date you file your tax return (IRS recordkeeping guidance: https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping). For complicated disputes or garnishments, keep records longer until resolved.

Practical tips I use with clients

  • Automate checks: download and store each electronic paystub in a dedicated folder. Tag files by year to make year‑end reconciliation easy.
  • Reconcile monthly: match bank deposits to net pay to catch missed direct deposits quickly.
  • Update W‑4 after life changes: marriage, a new child, or a second job generally requires W‑4 updates to avoid surprises at tax time.
  • Use payroll deadlines: each payroll has a cutoff for changes. Ask payroll about those dates so elections take effect when you expect.

FAQs (short answers)

  • Do employers have to give paystubs? Employers’ legal requirements vary by state; many states require pay statements. If you’re missing paystubs, ask payroll or check your state labor agency rules.
  • How do paystubs affect Social Security? Paystub entries for Social Security and Medicare create earnings records with the SSA that count toward future benefits (Social Security Administration: https://www.ssa.gov).
  • Should I keep old paystubs? Keep them at least through tax filing seasons and for the time needed to establish income for loans, disputes, or unemployment claims.

Closing and professional disclaimer

Your paystub is both a near‑term budgeting tool and a long‑term financial record. Make it a habit to review paystubs every pay period so small errors don’t become large problems. In my experience, spending a few minutes each pay period prevents most common payroll mistakes and protects your tax and benefit interests.

This content is educational and based on current public guidance (IRS, SSA, CFPB) as of 2025. It is not personalized tax or legal advice — consult a qualified tax advisor, payroll specialist, or employment attorney for questions specific to your situation.

Sources and further reading