Gross and Net Earnings

• Your paycheck reports both your gross and net earnings. Gross earnings consist of all money earned during a pay period while net earnings are your "take-home" pay or the amount actually paid to you after withholdings. If you earn an hourly wage, the number of hours you worked during a pay period are multiplied by your hourly wage to determine your gross pay. Time-and-a-half pay and double overtime pay, when applicable, also appear in your gross pay total but are itemized separately on your pay stub. Your employer or payroll supervisor then itemizes and subtracts your mandatory and employer-specific payroll withholdings to arrive at your net pay. Net pay appears on your actual paycheck.
  
  

Mandatory Deductions

• The deduction of FICA contributions to fund your Social Security and Medicare accounts is mandatory. The pay stub for your check reflects the total amount of Social Security and Medicare taxes deducted for both the current pay period and for the entire year. As of earnings year 2011, Social Security's tax rate for employee withholdings is 4.2 percent while the Medicare rate is 1.45 percent. Social Security withholdings stop at a base limit of $106,800. Medicare withholdings have no base limit. Federal and state income tax withholdings also reduce your paycheck. When you take a job, your employer provides you with a federal and state W-4 form to fill out, which specifies your income tax filing status and the number of dependents you can claim on your return. The information reported on the W-4 determines the amount of your paycheck withheld for taxes.
  
  

Employer-specific Deductions

• Your employer may offer a variety of opt-in programs that provide you and your family with healthcare, retirement accounts or savings accounts. Your individual contributions to a 401(k), Dependent Care Flexible Spending Account, Health Care Flexible Spending Account or general purpose savings account are processed as payroll deductions, which allows you to save small amounts from every paycheck to meet your annual goals. Your paycheck stub individually lists each withholding account and the amount placed into that account for the pay period.
  
  

Paychecks for Salary

• Employers calculate the paycheck of a salaried employee by taking the gross salary amount from your contract and dividing it by the number of pay periods specified within the contract. For example, if you sign a contract to work one year for $52,000 and your employer issues paychecks 26 times per year, the gross amount paid on each individual check is $2,000. Payroll withholdings are deducted from each check over the course of the year.