Pay stubs list all sorts of important info, from your total amount of earnings for the pay period to your net pay, or how much you take home after taxes. They also list all kinds of details about your withholdings, or the difference between your taxable earnings and your net pay.
Withholdings include federal taxes, state taxes, Social Security and Medicare. But depending on where you work and important events in your financial past, such as divorce or a tax lien, your pay stub could list even more.
Since a handful of commenters have voiced interest in learning what some of these codes really mean, we tapped Loren Downey, director of payroll practice for Namely, an HR and payroll firm based in New York, for some explanation. Here’s what she told us.
Every pay stub generally includes the company name and phone number, in addition to the employee’s annual salary and personal info such as her name, address, filing status, exemptions and net pay.
“Maybe further down, you’ll have a breakdown of their pay through that time period, listing deductions and taxes taken, so you can do the math,” Downey said. “You’ll come to a net figure, which should be what you’ve gotten through direct deposit,” that is, if you’re enrolled in this type of payment plan with your employer.
Where things get complicated, Downey said, is when companies list codes on their paycheck specific to how they do business or the benefits offered to workers. For example, some businesses may list health insurance as HS while others may call it HI. It’s all about whatever makes sense to the company, said Downey, so it’s not uncommon for codes to vary.
Common codes include the self-explanatory 401K for retirement savings contributions and 401K ER, which refers to an employer’s contribution if the employee receives a company match, said Downey, who adds that some companies like to personalize their codes, as with a bonus employees may know about.
Financial History Codes
If, for some reason, your child support is being taken out of your paycheck or you’ve had wages garnished, this will typically appear as GARN or CHSPPRT, Downey said. “Generally, [these codes are] intuitive.” For instance, LEVY could mean a tax levy.
The bottom line is simple, said Downey: “If you see something on your pay stub and you don’t know what it is, you should be asking your HR or payroll person to explain it to you.”
And if you’re trying to recover from financial events in your past, make sure to stay on top of your credit. Items like tax liens or judgments can not only lead to garnishment but also wind up hurting your creditworthiness. You may want to take steps to improve your credit scores. To see where you currently stand, you can view two of your free credit scores, updated each month, on Credit.com.
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