A Resource for Understanding Pay Stub Codes

Your pay stub contains the summary and record of what you earn. This includes all payroll information, deductions and taxes. With these, certain codes may appear strange.

These pay stub codes or abbreviations might make it hard for you to read and review your pay stub. However, you need to understand these codes to ensure accuracy in your pay stub.

Pay stub codes make it easy to section different categories of your earnings and payroll deductions. Some of them might be easy to guess, but the truth is, there are others that can't just be guessed.

This article explains these pay stub codes or abbreviations and what they mean. This would help you read your pay stub easily without the need to get confused.

What Is Contained in a Pay Stub?

A pay stub contains details of an employee's current pay. ‍It helps your employees get a better sense of their earnings. This includes their pay rate, gross earnings, and any deductions, such as income tax and employee benefits. It also helps provide employees with proof of income, whether for a car loan, lease, or mortgage.

See what is contained in an employee pay stub:

• General Information: This includes information like employee name, address, and social security number. It also contains the employer's company name and address. 

• Gross Wages: This is also referred to as gross income. It refers to the total amount employees earn before any federal or state income tax is removed from their pay. It includes hours worked, pay rate, overtime, and accrued time off.

• Deductions: These include income and payroll tax deductions and deductions for employee benefits. Voluntary and involuntary deductions are also included. 

• Net pay: It refers to an employee's take-home pay, which is how much money they take home on payday.

• Employer Contributions, such as the employer portion of the FICA tax, known as the Federal Insurance Contributions Act. It includes contributions for insurance premiums or your employee's retirement or savings plan.

Understanding the Layout of a Paystub and Its Codes

A pay stub has different sections, each representing your pay information. The layout of a pay stub is how your details are divided based on their sections. They are categorized into sections containing information and codes essential for you as an employee:

1. Header Section

The header section of a pay stub contains all basic information about employees. It also includes details about their employer and pay information. This comprises their pay period, whether hourly, weekly or monthly and employees' pay dates. 

The common codes usually represented in this section include:

• SSN-Social Security Number: This is a number given to you as an employee for tax and identification. 

• EIN- Employee Identification Number: It is a unique number given to employees by their employer. This especially helps to differentiate employees when multiple individuals share the same name.

• LOC- Location: This shows the location where the employee is currently working. 

• JOB or POS- Job Title or Position: This shows the official job title of an employee in a company or organization. 

• DEPT- Department: It shows the department where the employee works in a company.

2. Earnings Section

This section explains how much you earn- your gross wage or salary. It refers to how much you earn within a specific pay period. This also includes overtime pay, bonuses, tips and commissions. Common pay stub codes or pay stub abbreviations you would find are as follows: 

• OT- Overtime Pay: This refers to the money or compensation paid for working overtime. It relates to the work that exceeds your pay schedule. 

• REG- Regular Pay: This refers to the money you earn from working, which is your standard pay before any deductions are removed. 

• BONUS- Bonus Pay: This refers to extra earnings that are usually earned as rewards or incentives. It can be incentives earned from the completion of a project or even the end-of-the-year bonus.

• COMM- Commissions: Commission: These are employee earnings based on sales or performance metrics. It is typically calculated as a percentage of sales made.

• HOL- Holiday Pay: Holiday pay is the compensation for working on a public holiday. It also refers to the pay during holidays.

• SICK- Sick Pay: This is the payment for approved medical leave taken by an employee.

• VAC- Vacation Pay: VAC is the earnings granted to employees for personal or recreational use.

• TIPS- Tip Earnings: They are additional income that is given to employees by customers. It is usually common in the hospitality and service industries.

3. Payroll Deductions Section

This section highlights all deductions subtracted from your salary. It includes tax payroll deductions, insurance contributions, and retirement savings. Some common pay stub codes here are:

• FED- Federal Income Tax: This is the amount withheld from your paycheck to cover federal income taxes. It is based on your employee tax bracket and filing status.

• STATE- State Income Tax: This refers to the amount deducted for state taxes. It is only applied in states with income tax requirements.

• LOCAL- Local Tax: This is any city or county taxes deducted from employee earnings.

• FICA- Federal Insurance Contributions Act: This includes Social Security and Medicare taxes. It is used to fund retirement and healthcare programs.

• SS- Social Security Tax: SS is a payroll tax that is deducted to support the Social Security program. It is used to provide benefits to retirees and disabled individuals.

• MED- Medicare Tax: A federal tax deducted to fund Medicare. Medicare is a healthcare program for people over the age of 65.

• WKC- Workers' Compensation: This mandatory insurance contribution covers medical expenses and lost wages due to workplace injuries.

• 401(k)- Retirement Contributions: A contribution for employer-sponsored retirement savings plans.

• HSA- Health Savings Account: These are the pre-tax deductions used to pay for qualified medical expenses.

• INS- Insurance Premiums: Refers to health, dental, or life insurance plan deductions.

• GARN- Wage Garnishment: This is a court-ordered deduction from wages. It is used to repay employee debts, such as child support, loans, or unpaid taxes.

Other Pay Stub Codes or Pay Stub Abbreviations:

• SHFT- Shift Differential: The extra pay for working at night or during weekends.

• SEV- Severance Pay: The compensation paid when an employee's employment ends.

• MIL- Military Leave Pay: This compensation works for employees who are on active military duty.

• DENT- Dental Insurance: This deduction is made for dental coverage.

• LIFE- Life Insurance: These are the premiums that are deducted for life insurance policies.

• EXP - Expense Reimbursement: These are non-taxable payments paid to employees. It is for business-related expenses.

• NC - Non-Cash Benefits: These are the values of employee benefits. They are usually not in cash. Instead, they can be stock options or car allowances.

• CLM - Claim: Refers to the refund or reimbursement that is usually claimed from a benefit plan.

Why You Need To Understand These Pay Stub Codes

Workers generally are required to understand the pay stub abbreviations or codes for several reasons. Sometimes, because there is no proper understanding of the code, it can be easy to make a mistake. This can happen when handling your pay stub. When you don't understand the codes, you might not even seem to notice the errors when they occur. It is much better to learn how to read the pay stub codes and know what they mean. 

In Summary

These codes are extremely useful for ensuring transparency in wages, deductions, taxes, and your pay stub in general. Understanding the abbreviations is an essential part of managing your finances. With this, it becomes easy to read and review your pay stub, find errors, and have complete financial management.

Note that if you do not understand pay stub details, generating one accurately won't be easy. Regardless, our paystub generator got you! Generate your pay stub easily and immediately. Our tool gives you the best solution to understanding and minimizing errors on your pay stub. Use our online software today!