When preparing tax returns, the W2 form gives us the important figures that are needed in out calculations. But sometimes there is a delay in receiving your W-2 and when this happens, you wait anxiously for it hoping that it arrives in time before the tax deadline arrives. However, there is another way you can find your net income or W-2 wages even without the W-2 form itself. It is easy to calculate W2 wages using figures in your paystub and it only takes basic arithmetic to do so The procedure is given below.
You get a paystub every time you receive you wages and this shows you how much you earned for that payroll period and the total you have earned so far. 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.
At the end of the year, you get your final paystub. This shows your gross and net incomes for the entire year.
IT is important to first determine your gross income. In your final paystub you will find the gross income you made the entire year and this will include your extra overtime hours, bonuses or commissions.
Then when your gross income is determined, you need to subtract the wages that are non-taxable. The items included in non-taxable wages are disability wages, partnership income, employer insurance or gifts. You need to add up all the non-taxable wages and subtract it from your gross income.
Next, you need to check out other deductions that can be made on your income. There are many people wo are eligible for pretax deductions that can lower their taxable income amount. Some kinds of pretax deductions include employer benefits, retirement accounts, health insurance, life insurance, transportation programs, and more. You total deductions will also be indicated in your paystub. Then subtract this amount from the result of the previous step. This figure that you get after deduction is your total taxable income for the year.
You next need to determine how much taxes were withheld from your earnings throughout the year. You can find a figure on your paystub that reflects how much tax is withheld every pay day. How many times are you paid the whole year? Multiply that number with the tax withheld indicated in your pay stub. A workers who receives wages every 15 days receives his salary 24 time a year. Multiplying the tax withheld every payroll by 24 gives you the total tax withheld the entire year. The total tax withheld should then be subtracted from your total taxable income calculated in the third step. The amount that you get is your net income for the entire year.