It’s that time of the year we are all dreading once again – tax season. Some people even see tax season as a dreadful burden in their lives. But today, we are going to tax all about taxes and how to make the entire process easier for you by teaching you how to calculate W-2 wages from one of your paystubs so don’t leave just yet!
A lot of people wait until they have their W-2 before they get started on the entire tax process. This is because the information contained in your W-2 form is needed in preparing your tax return. So if you’re itching to get the whole thing over with, yet you don’t have access to your W-2 forms yet, you don’t have to keep worrying as the information you will need from there can be found and obtained from just one of your paystubs.
But before we actually begin, let’s tackle this common question: what sets a W-2 form apart from a paystub? A common mistake between those who are not familiar with the payroll or tax process is getting their W-2 and paystub all mixed up. It is essential that as early as now, you will understand what makes the two of them different because if not, you will encounter huge potholes in the tax process. So in this site, we’ll be telling you exactly what a paystub, final paystub, and a W-2 is.
The first one on the list is the paystub. When you get paid, you will receive a paycheck from your employer and this, my friends, is what we call a paystub. When you get your paystub, you will be able to see information like how much money you’ve gained in the duration of that pay period, the year-to-date payroll, the deductions and taxes that have been removed from your total earnings. With those deductions and taxes aside, the paystub will tell you your net earnings, or the actual amount of your income that you can get from your paycheck.
Now, a final paystub is the very last paystub you will be given at the end of the year which will tell you the gross and net income for the whole year.
Last of all is the W-2 form, which shows you the total taxes withheld from the year’s paycheck, bot h state and federal.
So a paystub might not give you the exact same information as a W2 form, but it has all the details that you need to figure out your general net income by yourself and this is how it works.
First, look for your gross income. Second, total the non-taxable wages and subtract it from the gross income. Third, subtract other deductions from that number, and fourth, determine annual taxes and multiply them with the number of times you are paid yearly. Last of all, subtract the total taxes from the number in step three and you’ll have your net income.
View here on this page a more comprehensive breakdown now.