What Should Be on Your Complete Check Review List?

Paychecks are more complicated than they appear. Beyond salary, deductions, benefits, and contributions impact take-home pay. Reviewing these details helps catch errors and ensures employees take full advantage of employer-provided perks.

A thorough review ensures accuracy and helps identify discrepancies early.

Net vs. Gross Figures

Understanding the difference between gross and net pay is essential. Gross pay is total compensation before deductions like taxes, insurance, and retirement contributions. This is the figure listed in employment contracts and salary negotiations but does not reflect the actual amount deposited into a bank account.

Net pay is what remains after deductions. This is the amount available for spending and budgeting. The difference between gross and net pay can be significant due to federal and state income taxes, Social Security (6.2% of wages up to $168,600 in 2024), and Medicare (1.45% of all wages, with an additional 0.9% for earnings over $200,000 for single filers).

State and local taxes also impact net pay. California’s income tax can reach 13.3%, while states like Texas and Florida have none. Pre-tax deductions, such as contributions to health savings accounts (HSAs) or commuter benefits, lower taxable income and reduce tax withholding.

Employer-Paid Benefits

Many employees focus on salary but overlook employer-paid benefits, which add significant value. These benefits often include health insurance, life and disability coverage, tuition assistance, and wellness programs.

Health insurance is among the most substantial benefits. In 2024, employers covered an average of 73% of family premiums and 83% of single coverage, according to the Kaiser Family Foundation. Some companies also contribute to health reimbursement arrangements (HRAs) or cover dental and vision insurance.

Life and disability insurance provide financial security. Many employers offer basic life insurance at no cost, often equal to one year’s salary, with options to buy additional coverage at a lower rate. Short-term and long-term disability insurance, which replaces a portion of income if an employee cannot work due to illness or injury, is also commonly employer-funded. Purchasing similar coverage independently is much more expensive.

Some companies offer tuition reimbursement or student loan assistance. In 2024, the IRS allows employers to provide up to $5,250 per year in tax-free tuition assistance. Some employers also help with student loan repayments, easing financial burdens.

Additional benefits such as employee assistance programs (EAPs), gym memberships, and childcare subsidies increase overall compensation. EAPs offer confidential counseling for personal and work-related issues. Fitness incentives promote healthier lifestyles, while childcare assistance—through direct subsidies or on-site daycare—reduces costs for working parents.

Retirement Contributions

Employer-sponsored retirement plans help employees build long-term savings. Many companies offer 401(k) or 403(b) plans, allowing pre-tax or Roth (after-tax) contributions. These accounts grow tax-deferred or tax-free, depending on the type.

Employer matching contributions boost savings. A common match formula is dollar-for-dollar up to 3% of salary, then 50 cents per dollar for the next 2%. Maximizing contributions to receive the full match is essentially free money.

The IRS sets annual contribution limits. In 2024, employees can contribute up to $23,000 to a 401(k) or 403(b), with an additional $7,500 catch-up contribution for those 50 and older. Employers may also contribute, with total combined contributions capped at $69,000, or $76,500 for those eligible for catch-up contributions.

Some employers offer profit-sharing or pension plans. Profit-sharing contributions vary based on company performance, while pension plans provide guaranteed retirement income based on salary history and years of service.

Unused Leave Payout

Accrued but unused leave can be a valuable financial asset. Many companies have policies on whether unused vacation or paid time off (PTO) is paid out upon resignation, termination, or retirement. These policies vary by employer and state labor laws.

State regulations determine whether employers must compensate employees for unused leave. California considers accrued PTO as earned wages, requiring payout upon departure. In contrast, states like Florida and Georgia allow employers to set their own policies, meaning payout is only guaranteed if explicitly stated. Some employers impose “use it or lose it” policies, limiting accrual beyond a certain threshold or requiring forfeiture after a set period.

Tax treatment depends on how leave payouts are distributed. If included in a final paycheck, it is subject to standard income tax withholding and payroll taxes. If paid separately as a lump sum, it may be taxed at the IRS supplemental wage rate of 22% for amounts up to $1 million in 2024, with any excess taxed at 37%. Timing a leave payout strategically can help minimize tax liability.

Verification of Payment Receipt

Ensuring wages are deposited correctly and on time is essential. Errors can occur due to payroll system glitches, banking issues, or miscalculations in deductions. Employees should verify that net pay matches expectations and that direct deposits are credited to the correct account. Any discrepancies should be reported immediately to payroll or human resources.

Reviewing pay stubs for irregularities in deductions, tax withholdings, and employer contributions helps catch unnoticed errors. Mistakes in Social Security or Medicare tax calculations, incorrect state tax withholdings, or missing reimbursements for work-related expenses can all impact take-home pay. Keeping a record of past pay stubs allows employees to track changes over time and identify potential payroll miscalculations.