Financial

5 Uses For Forms

Don’t Have Your W2? Use Your Paystub to Calculate Your Wages

You can easily calculate your net income with the use of the W2 form. If you W2 form is delayed then you might be at a loss on how to do your tax returns knowing that all the information about your income is there. You don’t have to wait for the W2 form to calculate your net income; a simple paystub can help you with the figures. With just a paystub in hand, you will be able to calculate W2 wages using just your basic math. Check the procedure below.

Every time you get your salary, there is a paystub that accompanies it which shows how much you earned for that period and the year-to-date payroll. This paystub also contains all the deductions and taxes that have been taken out of your salary. You net earnings is also indicated after all the deductions have been taken out and what is left is the amount of money you get 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.

Then when your gross income is determined, you need to subtract the wages that are non-taxable. Non-taxable wages include disability wages, partnership income, employer insurance, or gifts. After adding up all your non-taxable income, it should be taken out of 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 amount reflects 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 salaries twice a month, then the whole year, you would have received your salary 24 times. Multiplying the tax withheld every payroll by 24 gives you the total tax withheld the entire year. Finally, you need to subtract this total taxes withheld from your total taxable income which we found in step 3. The amount that you get is your net income for the entire year.

Why not learn more about Statements?

The Beginner’s Guide to Taxes