There is no stressful time of the year like the taxing season. At most times, people have to wait till they have their W2 so that they get the information required to pay taxes. Thankfully, you can start your tax paying process by figuring your W2 salaries from a pay stub using the guidelines outlined in this article.
Definition of Pay Stub
Pay stubs are the paychecks that an employer provides the employees after paying them. The pay stubs give details on your salary, and all taxes and deductions that have been subtracted from your pay. You can also use pay stubs to know the much to expect from your paycheck.
Definition of Final Pay Stub
A final pay stub is a pay stub that is provided when the year comes to an end. It indicates your entire year’s gross and net income.
Description of a W-2
A W-2 is a tax form that gives information on the total amount of taxes that have been deducted from the paycheck throughout the year. This is a crucial part when filing your tax return.
Using a Pay stub to Calculate The W-2 Wages
The W2 form not only provides information on the amount of taxes taken out of the paycheck but also on the net income made in that year. Even though a pay stub will not give you similar information, it will provide you with the relevant information that will help you know your overall net income. The following steps will guide you.
Find out Your Gross Income
The first step to take is to determine the total earnings before any deductions have been put in place. Mostly, it indicates the hourly rate multiplied by a specified number of hours per week.
Deduct Non-Taxable Wages
Wages cannot be taxed if they do not include federal, income or state taxes. On the other hand, it may include partnership income, disability wages, and employer insurance. Sum up the non-taxable payments and subtract from the gross income.
Determine Your Other Deductions
These deductions include employer benefits, and health and life insurances. From the amount in the above step, subtract all these deductions.
Get to Know Your Annual Taxes
Inquire on the amount of local, state and income taxes that were deducted from your earnings. By increasing the number of fees to be paid by the number of times you get you to pay per year, you will know the total amount of taxes that withheld at the end of the year.
Calculate W-2 Earnings
The last step is to subtract all the fees derived from the number in step there. The answer you will get will be your annual net income.
If you will find that the amount you get differs from that in the W2 form, cross-check the process for any math mistakes.