Tax season is the time of the year that no one is ever excited about. Some people even see tax season as a dreadful burden in their lives. In this article, we are going to tackle a matter regarding taxes and going through that process more conveniently so stick around and learn how to calculate W-2 from a paystub now.
Most people don’t start with the entire ordeal of the tax process until they obtain their W-2. The reason to this is that you need the information you can find on your W-2 form for the preparation of your tax return. So you don’t need to fret if you don’t have your W-2 form yet, because the information that you need from it can also be found on one of your paystubs!
Before we dive right into it, let’s tackle one of the most commonly-asked questions out there: what is the difference between a paystub and a W-2? 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 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. When you get paid, you will receive a paycheck from your employer and this, my friends, is what we call a paystub. On your paystub, you will find all you need to know about your pay, like the total income you earned from that pay period, the year-to-date payroll, and even the deductions and taxes that have been subtracted from your total income. After removing those deductions and taxes, you can see from your paycheck the actual amount that you can get from the paycheck, or more commonly referred to as your net earnings.
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.
Lastly, a W-2 form will tell you the total amount of taxes – including state and federal taxes – that have been withheld from your paycheck of that entire year.
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, 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 by the number of times you are paid every year. Last of all, subtract the total taxes from the number in step three and you’ll have your net income.
If you need more help, head over to this site now.