Get your fees properly paid is one stressful thing. At most times, people have to wait till they have their W2 so that they get the information required to pay taxes. In this article, you will get steps that will guide you through calculating W2 wages from a pay stub so that you do not delay your taxpaying process.
Pay Stub Definition
The paycheck you receive from your employer each time you are paid is called a pay stub. 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 or click to learn more.
Definition of Final Pay Stub
Final pay stubs are pay stubs received at the end of the year. It indicates your entire year’s gross and net income.
Meaning of a W-2
You can know how much taxes were withheld from your entire year’s paycheck. You will need this information when filling out your tax returns.
Using a Pay stub to Calculate The W-2 Wages
Through a W2, you will get details on the tax deductions made on your paycheck and the net revenue raised in the year. Pay stubs will not give you all these details, but, you will still be able to know the overall net income information using the features it provides. Use the following steps or see more here.
Get to Know Your Gross Income
The first step to take is to determine the total earnings before any deductions have been put in place. The total earnings are calculated by multiplying the rate per hour by a given number of hours for that week.
Subtract Wages That cannot be Taxed
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. You should subtract all your non-taxable fees from your gross income.
Find out What The Other Deductions are
These deductions include employer benefits, and health and life insurances. Sum up all these deductions and subtract from the figure in the step above.
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.
Get to Know Your W-2 Earnings
The final step would be to subtract all the taxes withheld from your salary from the amount calculated in the third step. The remaining amount will be the net income for the year.
In case the figures differ from the ones on your W-2 form, repeat the process to check if there are any math errors. Read this article about income stub:
https://en.wikipedia.org/wiki/Income_tax#Defining_income