Finding Ways To Keep Up With Income

Finding Ways To Keep Up With Income

How to Use Your Paystub to Calculate W-2 Wages

The W-2 form is very important when preparing your tax returns. Waiting for your W2 form to arrive can give you anxious thoughts whether it will arrive on time or delay your submission of your tax returns. You don’t have to wait for the W2 form to calculate your net income; a simple paystub can help you with the figures. It is easy to calculate W2 wages using figures in your paystub and it only takes basic arithmetic to do so Find out how below

Whenever you receive your wages you are also given a paystub which indicates how much money you earned for that period and your total income from the start of the year to date. Included in the paystub are the deductions taken out from your wages and what is left from the paycheck.

The final paystub is the last paystub you get for the year. This shows your gross and net incomes for the entire year.

The firs thing you need to know is how much gross income you’ve earned. Your final paystub will show your gross income which is the sum of all your regular wages including your extra overtime hours, bonuses, or commissions.

After finding your gross income, determine non-taxable wages and subtract it from the gross income. Disability wages, partnership income, employer insurance or gifts are non-taxable income. You need to add up all the non-taxable wages and subtract it from your gross income.

You also need to determine your other deductions. There are many people wo are eligible for pretax deductions that can lower their taxable income amount. Employer benefits, retirement accounts, health insurance, life insurance, transportation programs, etc. are some of the other deductions that can be applied to your gross income. Check your paystub and find out how much deductions you can make. This total should be deducted from the amount you got in the previous step. This figure that you get after deduction is your total taxable income for the year.

Then find out the total taxes withheld from your income the whole year. You can find a figure on your paystub that reflects how much tax is withheld every pay day. This amount should then be multiplied by the number of times you were paid that year. If you receive your salary twice a month, then the whole year you get paid 24 times. The total tax withheld from your income the whole year is the tax withheld per payroll times 24. The total tax withheld should then be subtracted from your total taxable income calculated in the third step. This figure is your net income for the year.

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