Common Paycheck Mistakes: Withholding, Deductions, and Surprises

Mistake #1: The "Exempt" Misclassification

The Issue: Your boss puts you on "Salary" to avoid paying overtime, even though your job duties qualify for overtime pay under the FLSA. The Cost: You work 50 hours a week but get paid for 40. The Fix: Check the FLSA guidelines. If you are wrongly classified, you may be owed back pay.

Mistake #2: The Wrong Tax Bracket Withholding

The Issue: You get a bonus. The software treats that single check as if you make that much every pay period, taxing it at the highest marginal rate. The Cost: A massive chunk of your bonus disappears. The Fix: This usually corrects itself when you file taxes (you get a refund), but be prepared for the initial shock.

Mistake #3: Phantom Deductions

The Issue: You stopped contributing to the charity fund, or your 401(k) loan is paid off, but the deduction continues. The Cost: $20-$100 per check leaking away. The Fix: Review the "Deductions" section of every pay stub, not just the net amount.

Mistake #4: Missing Hours

The Issue: You clocked in 5 minutes late but clocked out 30 minutes late. The system flagged the late start but ignored the late finish. The Cost: Unpaid time. The Fix: Track your own hours in a simple notebook or app. Compare against your stub.

Mistake #5: State Tax Errors for Remote Workers

The Issue: You live in Texas (0% tax) but your company is in California. They withhold California tax. The Cost: You are paying taxes you likely don't owe (depending on specific state nexus laws). The Fix: Ensure HR has your correct work location on file, not just the HQ address.

Summary

Trust but verify. Payroll departments are run by humans (and imperfect software). A 5-minute audit of your pay stub could save you thousands.

Verify the numbers with our Paycheck Calculator.