Most employees and sometimes even employers are confused as to what “YTD” or “Year to Date” means. Many are also dumbfounded on its importance when it comes to their pay stubs. A lack of knowledge on this topic may result in problems that may affect you both in the long term and short term.
YTD or Year to Date, with regards to pay stubs, refer to employer or employee's earnings, net pay, and deductions, from the beginning of the year to the current date.
An easy way to calculate your YTD is by using a pay stub generator with year-to-date, such as Real Check Stubs. This online creator can definitely make your job more comfortable when it comes to computing and entering data.
Now that you are acquainted with year-to-date, let us dive deeper and take a closer look at this article.
What Is a Year-To-Date Pay Stub?
YTD, which simply stands for "Year-to-Date," refers to the period that begins from the first day of the current calendar or fiscal year to the current pay stub or payroll date. Employers use YTD to record and track the total sums of various amounts, such as returns, earnings of a business, and employees' income and net pay.
A pay stub is crucial for your company to show employees their earnings for a specific pay period and their total income from the year-to-date. A paycheck stub summarizes your employee’s gross incomes, taxes and deductions, and net wages.
With that in mind, a year-to-date pay stub summarizes all amounts from taxes, payrolls to earnings from the beginning of the year to the current date in a financial year. It helps you to compare your business' performance data of your company and analyze trends in growth.
In some instances, YTD could include sums of money paid to independent contractors or freelancers. They are self-employed entities hired to accomplish a specific job to fulfill a contract. Compensations for non-employees are also essential for YTD as they are considered as business expenses.
Meanwhile, a year-to-date payroll represents the amount paid to all your employees in a fiscal year based on their gross income before taking out taxes and deductions.
YTD could also include payments paid in the current year but earned in the previous year. For instance, you could include a commission sale not paid in the current year but made at the end of the last year.
Why Is Year-To-Date In Payroll Important?
The year-to-date payroll lets an employee or a business owner know how much they earned from the start of the year to the current date. YTD allows employers to compare payroll expenses versus the total annual budget for those costs. It sets an earnings benchmark for people to base their taxes on.
Year-to-date pay stubs give you a clear understanding of whether your company or business is on the right path to meeting its projected results. It tracks the amount of money a person received and is trying to save for the year.
Year-to-date paycheck stubs are also useful for when the time for filing taxes comes. YTD helps to predict potential tax liabilities aside from the essential tax slips. It helps employers to make decisions regarding hiring and budget cuts and manage purchases and overall cash flow.
Business owners also need to understand a year-to-date check stub to fill out an employee IRS Form W-2 accurately. An IRS Form W-2, also known as the Wage and Tax Statement, reports information about an employee's yearly income. It lists the wages paid to an employee during a fiscal year and their withheld taxes.
YTD earnings provide a comparison of financial performance made over year-on-year. It allows you to adequately gauge how your earnings change without waiting to finish a full year to see data. The amount also lets you look into the future, as you would have a target to meet or exceed. It helps you strive to improve your business.
Why Do Employees Need YTD Pay Stubs?
Every time you pay an employee, you should provide a pay stub that reflects their gross and net wages, taxes, deductions, and YTD information.
The year-to-date pay stubs would help your employees to calculate how much they earned for the fiscal year, helping them to better plan for their future. YTD gives them information on whether they are saving enough money, or they need to work extra hours to achieve their goals financially.
The year-to-date payroll guides your employees to keep track of their wages and the total hours they have worked for the year. YTD is also beneficial for employees when it comes to filing taxes and paying contributions and benefits. It tells them how much money to set aside and how much to spend on their expenses.
The YTD numbers provide employees with a side-by-side comparison between their yearly incomes and various jobs. As employers, they can use the information to improve upon themselves in the long run. Seeing their yearly performance can become an extremely gratifying experience.
Employees can view their year-to-date payroll income through a physical or digital pay stub you decide to issue. As an employer, you should practice providing a pay slip every time your pay date comes along. This would give them a breakdown of their earnings, as well as boost their confidence.
Year-To-Date Earnings Template
Understanding the year-to-date amounts on a pay stub is the first step into creating an effective and straightforward paycheck slip.
Year-to-date earnings templates show essential information, such as:
- YTD Gross – This shows the gross income earned by a person, be it an employee or self-employed personnel, for the financial year before taking out deductions, such as taxes.
- YTD Deduction – These are the amounts to be deducted from an employee or an employer's gross pay, such as local and state taxes, social security tax, and FICA taxes. Deductions would also include contributions, health benefits, and insurances, among others.
- YTD Net Pay – This shows the net income/pay earned by a person for the financial year after taking out the YTD deduction amount.
- YTD Hours – This indicates the hours a person worked for the calendar year.
If you want to do your job that much easier, use a pay stub generator, such as Real Check Stubs, to make your employees salary slips. You can select from a roster of year-to-date pay stub templates as excellent tools to include YTD amounts on checks.
Online generators also use a year-to-date calculator pay stub to compute your business' YTD automatically.
Calculating your company’s year-to-date payroll involves gathering each of your employees’ year-to-date pay stub and adding them to each other.
For example, you have five employees currently working in your company, namely, Michelle, Ada, Mia, Chris, and Van. Michelle earned a total of $40,000 in gross income YTD, while Ada earned $36,000, Mia earned $42,000, Chris earned $28,000 and Van earned $47,000. Add up all five year-to-date check stubs, and you would get a total of $193,000 for this year’s payroll.
A pay stub generator with year-to-date would usually provide you with the YTD data at the bottom part of the last column of the pay slip. Using online generators gives you the freedom to customize your issued pay stubs.
How Understanding Your YTD Amount Can Help You
Although you may find it tedious, keeping track of your Year-To-Date amount has its benefits. It can help you calculate your taxes, prepare you for your tax returns and guard you against pesky audits.
As an employee, you and your family rely on you to provide for your daily expenses. One emergency can ruin your savings and finances. Your YTD amount can help you keep track of the growth of your wealth. Having this information will help you with your financial planning. With it, you can plan for future and unforeseen expenses.
Comparing your YTD for two periods (i.e., this year and last year), you can reliably predict the trajectory of your future incomes. You would have an idea of what your future income would be like. Being able to predict this will help you adjust your income and expenses.
From gross income, net pay to deduction, year-to-date pay stub amounts provide employers and employees with an idea of their performance in a given fiscal year. It gives you a target to meet on year, and as an employer, you need to understand the practical uses of YTD to take control of its advantages.