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. 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.
A lot of people wait until they have their W-2 before they get started on the entire tax process. The reason to this is because when you prepare your tax return, you will need all the information that can be found in your W-2 form. 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 first, let’s address this common question: what exactly is the difference between a W-2 form and a paystub? If you are new to the payroll or tax process, you might confuse your paystub with your W-2. 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.
Let’s talk about the paystub first. 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.
And of course, we have the W-2 tax form which contains the list of taxes that have been withheld from your paycheck throughout the year, be it state or federal.
So a paystub might not give you the exact same information as a W2 form, but it has all the details that you need to figure out your general net income by yourself and this is how it works.
First, look for 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. 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.
View here on this page a more comprehensive breakdown now.