Tax season is back once again and nobody is happy about it. It adds stress and hassle to the already very tiring days of our 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!
Most people don’t start with the entire ordeal of the tax process until they obtain their W-2. 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? If you are new to the payroll or tax process, you might confuse your paystub with your W-2. It is vital that you will know the distinctions and differences between the two so as not to encounter road bumps in the tax process. So here in this site, we will elaborate the definition of a paystub, final paystub, and a W-2 form.
The first one we’ll be discussing is the paystub. At the moment you get paid, your employer will hand you your paycheck – this is what we refer to as 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.
With a paystub, you might not get the absolute same information from a W-2, but the essential details you will need to figure out your overall net income is already there, so follow these steps and you’re good to go.
First, find your gross income. Second, subtract your total non-taxable wages from it. Third, subtract other deductions from that number, and fourth, determine annual taxes and multiply them with the number of times you are paid yearly. And finally, subtract the total taxes withheld from your income from the number you came up with in step three, and you will have your net income.
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