Have you just started work? Maybe you’ve got your paycheck for the first time or maybe you’ve been freelance for most of your life and now you’ve settled down with a more secure job.
If so then you’ll want to know what your paycheck actually contains. The first time you see your paycheck it might blow your mind but paycheck stub abbreviations are easy enough to follow when you understand them.
Here’s everything you need to know about pay stub abbreviations and how reading a pay stub can transform your working life.
IRS – Internal Revenue Services
The IRS is the government agency responsible for collecting taxes. It’s separate from the government and they are bound by laws to keep the amount you earn a closely guarded secret.
This is why President Trump has famously been able to get away without releasing his tax returns into the public domain for so long. He would have to waive his right to this secrecy.
Remember that you have to declare and pay tax on any income you make anywhere in the world.
OT – Overtime
Overtime is when you carry out work outside your normal hours. Perhaps you need some extra income during the Covid pandemic to see you through or maybe you are saving up for a new car or even a house.
It’s great to see how much extra money you’ve made each month and you can give yourself a great pat on the back when you see it written down rather than just seeing your pay as one lump sum.
Overtime is taxed in a different way to other income and in 2020 a new overtime rule came into force that your employers should know about. This means while you might earn more you might pay more in tax.
ST- State Taxes
In the U.S every state has its own tax code and its own way of doing business. When your business uses a paycheck stub creator to give you a monthly update on your income they should be clear to establish what taxes have been deducted by the state.
This is important so that when election times comes, you can see whether it’s the state of the federal government taxing you. If you feel the rate is too high you can vote out the relevant politician. This is one of the key reasons for reading a pay stub is important.
Paycheck Stub Abbreviations: Know Your Rights
Paycheck stub abbreviations help you understand what your paystub actually contains and how much tax you are actually paying.
If you understand the abbreviations you can determine first if you have paid too much or too little tax. Then if you are unhappy with the rate of tax you can determine if this is the result of state or federal policies.
Paycheck stub abbreviations also help you determine how much overtime you’ve put in and that this is properly paid.
If you are interested in learning more about paycheck stub abbreviations be sure to check out the rest of our site.