Three out of five employees live paycheck to paycheck, and payroll errors can be costly for companies. Payroll mistakes should be corrected as soon as they are discovered. To prevent mistakes from happening:
- Examine your pay stub carefully for the following information.
- Ensure your stub shows you your hours, hourly rate, gross earnings, and net income (take-home pay).
- Examine for deduction errors.
Check Your Benefits
Whether you are an hourly or salaried employee, there are likely deductions from your paycheck to pay for your healthcare, retirement savings or other benefits. Aside from the usual items like taxes, your company may also deduct funds for union dues, professional association fees, transfers to individual registered savings plans and charitable donations. Check if any of these deductions have changed since you last checked. Look for the gross and net pay amounts to ensure you receive the correct part for your work. Your paycheck should include your regular rate of pay, as well as any overtime or double-time hours you worked. It would help if you double-checked the hours you were paid for each week and that your employer is doing everything correctly in how much time you are being paid for meal breaks or other unpaid hours. Employers want payroll errors to be avoided, and it is best to catch them as soon as possible with a paycheck calculator so that employees can be reimbursed for any money lost due to the error. However, many employers need help to keep up with payroll processing laws and employee pay rights. That is why it is important for employees to regularly check their pay stubs so they can catch any mistakes and get them fixed quickly.
Check Your Wages
When employers mess up paychecks, it can greatly impact employees’ lives. A single payroll error can delay the processing of bills or cause a direct deposit to go into the wrong account. It can also make it hard to pay for essentials or cover unexpected expenses. The good news is that most employers try to correct paycheck errors quickly before checks and direct deposits are sent out. It is especially important since over half of employed Americans live paycheck to paycheck, with salaried and hourly employees experiencing issues. Employees should read their pay stubs carefully. Look at the gross amount of your pay — before any deductions, such as taxes or insurance payments, have been removed. Then check to see if the total number of hours you worked is listed correctly. It is particularly important for hourly employees who are paid a different rate each pay period. If you find an error, contact the person in charge of your company’s payroll or timecards, she suggests. Ask what the problem is and how it can be corrected. A professional should explain the process and help you understand your rights as an employee. And if you’re still unhappy, your employer should have a strategy for you to file a complaint.
Check Your Taxes
Whether you deposit your paycheck into a bank account or directly deposit it, your pay stub lists the gross earnings you are entitled to and the taxes withheld from that amount. This information is important to understand, and reviewing it can help detect errors. A few errors can lead to big trouble for employees, especially if they occur in payroll tax deductions. For example, a mistake in logging overtime hours can impact the amount of taxes withheld for an employee, potentially resulting in refund payments or overpayments that span multiple pay periods. Even with the most sophisticated computer systems, math errors happen. From a forgotten zero to a decimal point in the wrong place, these mistakes can be costly. Also, it’s common for people to need to remember about deductions or credits they are entitled to. That type of error can result in an IRS return amendment that requires more work on the employee’s part than just filing a corrected return.
Another thing to watch for is a discrepancy between the amount of money the IRS refunds and the amount of the check cashed in your bank account or pay stub. In this case, the IRS will often send a written explanation to accompany the check or direct deposit, but that only sometimes happens in time.
Check Your Deposits
Bank errors can occur in several ways, but the main ones are deposit or withdrawal mistakes. For example, a teller may accidentally type in the wrong amount when depositing a check. Or the bank might process a transaction twice, which can cause duplicate charges or deposits to appear on your account. These errors are usually easy to catch, especially if you compare receipts and your check register to the transactions on your bank statement. Mobile banking apps have made keeping tabs on your money even easier. When you deposit using your phone, the app should show you the front and back images of your endorsed check before your funds are credited to your account.
But what if the image needs to be clarified, or there’s a problem with the magnetic stripe or MICR numbers on the check? Then, your deposit could be rejected, causing delays and potential money loss. You can get those funds back if you report the problem quickly. Remember that you’ll often need to provide documentation or evidence, such as your deposit slip, ATM receipts and canceled checks. Then, give your bank time to investigate and resolve the issue. Generally, they should be able to do so within ten business days.