18 Anyone who works and receives a paycheck needs to have a basic under- standing of how they will be paid, and of the taxes they are required to pay. When you’re hired for a job, the law requires that: u you complete IRS Form I-9 before you start working (to establish your identity and eligibility to work in the U.S.). u you complete IRS Form W-4(Employee’s Withholding Allowance Certificate). u your employer gives you information on your pay for each pay period. u you receive an IRS W-2 Form at year’s end to submit with your tax return. Paychecks and pay stubs When you have a job, you will either receive a paper check (paycheck) for your work, or your pay will be electronically deposited into your bank ac- count (direct deposit). Regardless of how you're paid, most states require that employers provide their employees with information on their pay for each pay period. To accomplish this, a pay stub is typically attached to each employee’s paycheck, or it’s sent electronically. Most people pay little attention to their pay stubs. But as a young earner striving to be financially literate, it’s important for you to understand all of the entries. Here is some of what may appear on your pay stub: u your name and Social Security number u your Employer’s I.D. number (EIN) and contact info u the pay date and pay period (e.g., Oct. 15 to Oct. 29) u your gross wages, deductions, and net pay for that pay period u your year-to-date (YTD) gross wages, deductions, and net pay Gross wages reflect how much you’ve earned. Net pay reveals how much you actually get to keep after deductions. The difference between gross and net pay is a cause of dismay and confusion for many wage earners! Paying Taxes