18 Everyone who works and receives a paycheck should have a basic under- standing of how they will be paid, and of the taxes they are required to pay. When you are hired for a job, the law requires that you: u Complete IRS Form I-9 prior to starting work (to establish your identity and eligibility to work in the U.S.) u Receive a paycheck and pay stub for each pay period u Receive an IRS W-2 Form at year’s end, and submit it with your tax return Your 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 an employee’s paycheck, or sent electronically to employees. Most people pay little attention to their pay stubs. But as a young earner striving to be “financially literate,” it’s important to understand all of the entries. It can seem daunting at first (but not nearly as confusing as your cell phone bill). 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 Nov. 15) 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