If you’re getting your first paycheck, you may be unfamiliar with the financial jargon that’s printed alongside your payment details. Here are some basic terms to know.
- Paycheck: A bank check given to an employee with a sum based on their wage or salary.
- Direct deposit: The sum of what would be in a paper paycheck is, instead, electronically transferred into your bank account. You need to set this up with your employer, typically by providing routing details found on your paper check.
- Gross pay: The total amount of money earned prior to taxes and other deductions.
- Net pay: The amount of money earned after taxes and other deductions. Deductions can include: federal and state income taxes, Medicare taxes, and Social Security taxes.
- Tax withholdings: A portion of a paycheck that is deducted by the employer and given directly to the government. The amount withheld is based on an employee’s IRS Form W-4.