What Do These Codes on My Paycheck Mean?

Pay stubs list all sorts of important info, from your total amount of earnings for the pay period to your net pay, or how much you take home after taxes. They also list all kinds of details about your withholdings, or the difference between your taxable earnings and your net pay.

Withholdings include federal taxes, state taxes, Social Security and Medicare. But depending on where you work and important events in your financial past, such as divorce or a tax lien, your pay stub could list even more.

Since a handful of commenters have voiced interest in learning what some of these codes really mean, we tapped Loren Downey, director of payroll practice for Namely, an HR and payroll firm based in New York, for some explanation. Here’s what she told us.

Personal Information

Every pay stub generally includes the company name and phone number, in addition to the employee’s annual salary and personal info such as her name, address, filing status, exemptions and net pay.

“Maybe further down, you’ll have a breakdown of their pay through that time period, listing deductions and taxes taken, so you can do the math,” Downey said. “You’ll come to a net figure, which should be what you’ve gotten through direct deposit,” that is, if you’re enrolled in this type of payment plan with your employer.

Company-Specific Codes

Where things get complicated, Downey said, is when companies list codes on their paycheck specific to how they do business or the benefits offered to workers. For example, some businesses may list health insurance as HS while others may call it HI. It’s all about whatever makes sense to the company, said Downey, so it’s not uncommon for codes to vary.

Common codes include the self-explanatory 401K for retirement savings contributions and 401K ER, which refers to an employer’s contribution if the employee receives a company match, said Downey, who adds that some companies like to personalize their codes, as with a bonus employees may know about.

Financial History Codes 

If, for some reason, your child support is being taken out of your paycheck or you’ve had wages garnished, this will generally appear as GARN or CHSPPRT, Downey said. “Generally, [these codes are] intuitive.” For instance, LEVY could mean a tax levy.

The bottom line is simple, said Downey: “If you see something on your pay stub and you don’t know what it is, you should be asking your HR or payroll person to explain it to you.”

And if you’re trying to recover from financial events in your past, make sure to stay on top of your credit. Items like tax liens or judgments can not only lead to garnishment but can also wind up hurting your creditworthiness and you may want to take steps to improve your credit scores. You can see where you currently stand by viewing two of your free credit scores, updated each month, on Credit.com.

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You’ll Get Your Paychecks Faster By the End of the Year

You may see your paycheck appear in your bank account a bit faster in 2016.

According to the National Automated Clearing House Association (NACHA), the organization that oversees the automated clearing house (ACH) network, major U.S. financial institutions are on course to offer to same-day ACH payments beginning Sept. 23

That’s the day a new rule requiring financial institutions accept same-day online bill and person-to-person payments is set to goes into effect (more on that later). But, NACHA said, a majority of these major players plan to extend similarly speedy payment services to their business customers as well. Per a survey it conducted in January, 100% of the top 25 ACH-originating financial institutions are planning to offer same-day payroll payments and 95% are planning to offer same-day business-to-business payments by the end of the year. An overwhelming majority (86%) plan to offer these services to all their customers, while the remaining 14% will offer them to select clients based on need.

The move could mean you’ll see your paycheck deposited into your bank account a bit sooner than before — on the same day the payment is originated, NACHA said.

Fixing the Payment Hold Up

Electronic payments currently get batched and processed through the ACH network as a one-time, next-day settlement. The process is designed to avoid unnecessary money transfers from bank to bank within a 24-hour timeframe, but it can cause transactions, including online bill pay, to get delayed. Back in 2015, the Federal Reserve approved the same-day ACH payments rule set to go into effect this September in an attempt to speed up the system. (It essentially adds more batches to each day, allowing payments to get processed in a more timely fashion.)

Earlier payroll deposits, coupled with the quicker online bill pay, could help prove helpful to folks struggling to pay certain bills on time. Remember, a late loan payment is one of the quickest way to damage your credit. And unpaid bills that enter collections can also damage your score. You can minimize the odds of making a late payment by setting up auto-pay or signing up for alerts that let you know your balance is soon due. You can see how your current payment history is affecting your credit by viewing your free credit report summary, updated each month, on Credit.com.

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