When preparing tax returns, the W2 form gives us the important figures that are needed in out calculations. 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. The good thing is that even without the W2 form, you can actually calculate your net income or W2 wages from your basic paystub. With just a paystub in hand, you will be able to calculate W2 wages using just your basic math. Find out how below
Whenever you receive your wages you are also given a paystub which indicates how much money you earned for that period and your total income from the start of the year to date. You can only find here how much was deducted from your salary and the net salary you get for that paycheck.
You final paystub is what you get at the end of the year. Your gross and net incomes are shown on this final paystub.
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.
You the need to subtract non-taxable wages to your gross income. Disability wages, partnership income, employer insurance or gifts are non-taxable income. 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. These deductions can include employer benefits, retirement accounts, health insurance, life insurance, transportation programs, and more. 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 figure that you get after deduction is your total taxable income for the year.
Next, you need to find out the total taxes withheld from your income for the entire year. Every paystub gives you a figure of total taxes withheld. How many times are you paid the whole year? Multiply that number with the tax withheld indicated in your pay stub. If you receive salaries twice a month, then the whole year, you would have received your salary 24 times. The total tax withheld from your income the whole year is the tax withheld per payroll times 24. Then you need to subtract the total tax withheld from your total taxable income. The results would be your net income for the year.