Definition
The term pay stub refers to a document which outlines the compensation paid the employee as well as an itemized list of adjustments. Pay stubs may include not only the amount received or deductions taken in the current period, but also the year to date values.
Explanation
Also known as a paycheck stub, a pay stub provides employees with an itemized list of the compensation provided by their employer and the deductions taken from their gross pay. Generally, the sections of a pay stub include:
Gross Pay Amounts: this section outlines the compensation provided to the employee before any deductions. Amounts appearing in this section can include regular pay, vacation pay, incentive compensation or bonuses, paid holidays in addition to any stipends owed the employee.
Taxes: this section contains a summary of the taxes owed on the compensation received, which are deductions from the gross pay amounts. Items appearing in this section include federal income tax, state and local income taxes (where applicable), Social Security, Medicare and unemployment insurance payments.
Deductions: this section of the pay stub outlines additional (non-tax) amounts removed from the employees pay by their employer. Items appearing in this section include amounts directed to the employee's thrift and retirement plans, benefits sharing (dental, medical), funds placed in a healthcare savings account, wage garnishments, as well as deductions for employer sponsored programs such as commuting expenses.
Finally, the employee may be entitled to reimbursement for job-related expenses they have incurred. The amounts will appear in this section and will add to the employee's Net Pay, which is the amount deposited in the employee's bank account or physical paycheck. In addition to the current period, a pay stub may also summarize the year-to-date (YTD) amounts received and deducted from the employee's compensation.