The Ultimate Guide to Understanding Paystub Abbreviations
March 31, 2023
Pay stubs are an important part of any payroll process as they provide employees with detailed information on their earnings and deductions. However, paystub abbreviations can be quite confusing and difficult to understand.
But don’t worry—we’ve prepared a guide to help you understand them in no time!
We’ll tackle the most common abbreviations, explain their meanings, and offer some tips on how you can review them to ensure accuracy. So, let’s get to it!
- Pay stubs list important information about your taxes, earnings, and deductions.
- The most common pay stub abbreviations can be found in the header, income, and tax deductions sections.
- Some common pay stub abbreviations include Year-to-date (YTD), Federal Insurance Contributions Act (FICA), State Income Tax (SIT), Federal Income Tax (FIT), and Health Savings Account (HSA).
- Pay stubs are highly valuable as they can serve as proof of income and be used to keep track of and record income.
What is a Pay Stub?
A pay stub (also referred to as a paycheck stub or a pay slip) is a document that lists the employee’s payment details. These details are based on a specific pay period. A pay stub gives a breakdown of an employee’s earnings, including deductions (e.g., taxes, Social Security, etc.), benefits, and contributions to a retirement plan.
Pay stubs include the employee’s name, ID number, and the pay period dates. Some pay stubs can also include year-to-date totals. These provide a total of an employee’s earnings for the entire year.
They are usually issued by employers together with a paycheck or statements that indicate a direct deposit.
Essential Pay Stub Abbreviations
Pay stub abbreviations are codes used on a pay stub that indicate taxes, deductions, and benefits. We’ll go over them in detail in the following section.
The top of a pay stub check features a header. The header displays the address of an employer, the company name, and the employee’s address. Additionally, the header includes the social security number of the addressee, the reporting period, and the payment date.
The reporting period is the time an employee has worked and for which they’re being paid. This is also referred to as the “earnings period.” The pay date is when an employee receives their paycheck.
Some abbreviations you can notice in the header are:
- Check #. The check number refers to the unique, three to four-digit number.
- Employee Identification Number (EIN). Employee Identification Number is a unique number given to each employee working for an establishment.
As the recipient of a check, you may be interested in finding out more about the amount you will receive. However, it can be confusing to interpret pay stub information, especially if you’re unfamiliar with the terms it uses.
Generally, there are two types of income that can be mentioned in a paycheck as abbreviations. Those are:
- Gross income. This refers to the total amount you earn during a pay period, before any tax deductions.
- Net income. Refers to the actual amount of money you will receive after tax deductions.
#3. Tax Deductions
Tax deductions are the most common deductions you’ll notice in a pay stub. They include:
- SIT. SIT stands for State Income Tax. It deals with the amount of state income tax that is withheld from a paycheck.
- FIT. Short for Federal Income Tax. The amount of federal income tax that needs to be deducted from a paycheck.
- FICA. FICA is short for Federal Insurance Contributions Act. It refers to the Social Security taxes that can be deducted from a paycheck.
- Local tax. This includes any city tax deductions.
#4. Before-Tax Deductions
There are some deductions that can be made from an employee’s gross pay before any taxes are withheld. These are referred to as “before-tax deductions.” Some abbreviations you can come across are:
- HSA. The Health Savings Account are tax-advantaged savings that are used for paying medical expenses.
- HCR. The health care reimbursement plan, which is a federal law enacted in 2010 that aims to make healthcare more accessible to Americans.
- 401(k). This is an employer-sponsored retirement plan named after the tax code that governs it.
- FSA. Stands for Flexible Spending Account. It allows employees to set aside a specific portion of their pre-tax income to pay for healthcare.
- STD. Short for Short-Term Disability, is a type of insurance that provides income benefits to employees who have illnesses or injuries.
- LTD. Refers to Long-Term Disability. It’s a type of insurance that gives employees income benefits when they’re dealing with an injury or illness for a longer period of time.
#5. After-Tax Deductions
Withdrawals that happen after-tax deductions can also be referred to as penalties. The abbreviations you encounter mean the following:
- GARN. Garn or “garnishment” refers to the legal process in which a portion of an employee’s payment is deducted by the employer to pay off the employee’s debt.
- GARN %. Garnishment percentage is a percentage of income that is withdrawn from the employee’s pay. In most cases, it is determined by federal or state law.
- IRS Levy. IRS levy is a legal action initiated by the IRS which collects legal seizures as a way to pay taxes.
- StdntLoan. Student loan is the deduction that can be made from an employee’s paycheck to pay off their loan. This deduction can only be made by the employee or employers.
Other Important Paystub Glossary
Other essential pay stub abbreviations include:
- YTD. This abbreviation stands for year-to-date. It refers to the total earnings or deductions throughout an entire year.
- SSN. The Social Security Number is a unique nine-digit ID number that each U.S. citizen or permanent resident has.
- PTO. Short for Paid Time Off, PTO refers to vacation or sick leaves that an employer is obligated to pay.
- OT. Overtime is any additional hour that an employee has worked after their set working hours.
- MED. This is an abbreviation for Medicare, a federal health insurance program for people over the age of 65. It is also available for younger people with disabilities, and people with End-Stage Renal Disease.
- COMM. Commission refers to additional compensation paid to an employee based on a successful sale or client contracts they may secure.
- BON. Bonus pay in a pay stub deals with any additional compensations that must be paid to an employee as a reward for their performance.
- SUI. State Unemployment Insurance is a tax that funds the state’s unemployment programs.
- SDI. State Disability Insurance funds the state’s disability insurance program.
Why Are Pay Stubs Important?
Pay stubs are important for the following reasons:
- Employment verification. Pay stubs can be used to verify employment easily. They can serve as evidence that a specific employee is receiving a paycheck.
- Wage resolution. If fraud occurs, and an employee wants to show that they haven’t received the correct payment amount, they can use a pay stub as evidence.
- Legal reasons. The law requires employers to give employees detailed pay stubs. If they fail to do so, they can be met with penalties.
- Record keeping. Employees can use pay stubs to keep track of all of their earnings. This can make it easier for them to monitor any finances or future plans.
- Income proof. Since pay stubs provide records of an employee’s earnings (including deductions or gross pay), they can be used for loans, rent, and even to prove income for tax purposes.
How to Create Professional Paystubs Effortlessly
To create a professional pay stub effortlessly, you can use our paystub generator. It’s super easy to use, it saves time, and you can use it for multiple employees. All you have to do is:
- Choose your desired format. We offer 6 formats with different design and color choices. Choose one that works best for you.
- Type in the required information. Fill in the required information. This includes information on the payment type, hours worked, as well the employee and the company’s information.
- Preview and save the pay stub. Once you’re done, have a look at the generated preview of your pay stub before saving it.
Once you’re done, you can download your pay stub and forward it to your employees hassle-free.
Paystub Abbreviations FAQ
#1. How do I read my pay stub?
To read your pay stub, all you have to do is check the employee information section, the pay period, the gross pay, taxes, review any deductions, and lastly, calculate your net pay.
#2. What is a pay stub?
A paystub is a document that employers give employees to showcase their earnings and deductions. It includes a header, the income, and before and after-tax deductions.
#3. Is pay stub and paycheck the same?
While they are closely related, a pay stub and a paycheck aren’t the same. A paystub gives a breakdown of an employee’s earnings for a specific payment period. On the other hand, a paycheck is the check handed out as payment for an employee’s work.
#4. What are the payroll codes?
Payroll codes are usually used by employers to classify different payment types. Some of them are earning codes, tax codes, deduction codes, leave codes, and miscellaneous codes.
We hope this guide can help you understand pay stub abbreviations easier so that you can now read pay stubs effortlessly! If you want to create these important documents the easy way, head over to our paystub generator to get started.