- It is a good idea to hang on to each pay stub at least until you receive your next one. Each pay stub you receive shows the amount of your current wages, along with the year-to-date figures for your federal taxable wages, Social Security wages, Medicare wages, state wages and local wages. If you contribute to a 401(k) or 403(b) plan, you will notice that your year-to-date federal taxable wages are lower than your year-to-date wages in those other categories. That is because the 401(k) plan contributions are deducted from your income before federal income tax is calculated.
- If you earn the same amount of money each pay period, you can use your current pay stub to calculate both your earnings and your tax payments for the entire year. All you need to do is look at your current earnings and tax withholding and multiply it by the number of pay periods per year. For instance if you are paid every two weeks and your pay stub shows federal income tax withholding of $100, your total tax withholding for the year will be $2,600.
- It is a good idea to do some advance tax planning throughout the year, rather than just at the beginning of the year. Your year-to-date pay stub is a useful tool for this tax planning, since it allows you to plug in accurate numbers for your wages and tax withholding. After you enter that information, all you need to do is add any additional income you have from interest, dividends and other sources into a tax software package. From there you can instantly see the amount of your potential refund, or the additional amount you might owe the IRS.
- Many employers now provide online access that allows their workers to review their current and past pay stubs whenever they wish. Some firms use these electronic pay stubs exclusively, while others still provide paper pay stubs in addition to the online versions. Check with the human resources department at your company for instructions on accessing online pay stubs.
Year-to-Date Figures
Annual Figures
Tax Planning
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