Double Check Your Paycheck

by Sam Kerch

Paycheck stubs are often thrown away, filed or forgotten. Not only does this overlooked piece of paper contain valuable information that determines how much cash you bring home, but it also may clue you in to costly errors.

Errors in the payroll process can cost workers a lot of money. Errors can mean employees are shorted, or they may also be overpaid. It's not free money. If an employee is overpaid, most often, that employee will be held liable for the repayment of those funds. Errors in withholding taxes, underpayments, overpayments and similar costly payroll mistakes happen more often than you might think.

For example, in 2000, about 150 employees of the Nevada Department of Motor Vehicles and Public Safety were forced under law to repay $23,000 in overpayments, which was the result of human error in the payroll department.

In 2004, the federal Government Accountability Office reported that widespread payroll problems with the Army Reserve resulted in paycheck errors in 95 percent of cases examined by Congressional auditors. Many soldiers who were sent to Iraq and Afghanistan spent more than a year straightening out problems with their paychecks, allowances and tax benefits.

The majority of the Army Reserve payroll problems involved overpayments, for which the soldiers are ultimately responsible. Troops who didn't acknowledge the extra pay took major financial hits. In fact, the agency recommended a criminal investigation for one soldier who did not report $36,000 in overpayments.

Many of these instances could have been prevented and thousands of dollars saved, simply by double checking paychecks and acting to fix the problem quickly.

The payroll process is complex. Errors can occur anywhere from the point of time card approval all the way to the check calculation point. Fortunately, with careful planning and follow-up, errors can be fixed or identified quickly before any monetary damage occurs.

Try these three tips that will help keep your payroll on track:

Getting Your Fair Pay - Human error can result in underpayments, withholding errors and more. If you discover that you are underpaid for any reason, report it immediately. Most employers will cut an additional check as soon as an underpayment error is revealed. An error in your withholding could mean a nasty surprise at tax time. If an employer accidentally overpays, they may require employees to repay overpayments. They may take the overpayment back all at once, or in some kind of payment plan.

Maintain Confidentiality - If you discover a paycheck mistake, do not disclose the error to anyone outside the payroll department or a senior manager. Discussing salary or payment information with co-workers can foster a negative office environment. In many companies, such public disclosure can violate employment policies and lead to discipline or even dismissal.

Keep Checking Up - Marriage, divorce, children and sizable pay bonuses or raises are all instances when you should update your W-4 form. Once you complete the paperwork, check subsequent pay stubs to ensure your employer correctly updated your tax information. If not, immediately catching this error can prevent a future payroll headache.

Sam Kerch is a senior tax research analyst for Symmetry Software, which operates The web site offers employees self-service tools for paycheck management, including free personal finance calculators. Individuals can model "what-if" scenarios using their wages and other paycheck figures to determine the impact on "take-home pay" when they adjust their withholding, add the impact of voluntary savings programs and retirement plans, note the tax advantage of cafeteria benefit plans, change marital status or have a baby.

Take the Next Step:

  • Get out your pay stubs and take a look at them. Make this a new habit.
  • Check out these calculators at They can help calculate everything from your take home pay to your 401 k.
  • Don't be afraid! If you find problems, bring them to the attention of the payroll department today.

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