A lot of people never start their tax process unless they get their W2. Preparing your tax return you must have your W2. Make sure you know how to calculate your W2 using your paystub. The reason why people get mixed up is because they do not know the difference between w2 from paystub. The lack of knowledge of the difference between W2 and a paystub confuses someone until your final paystub and W2 do not match. For you to prevent these confusion it is good to know and understand the difference.
Know the meaning of a paystub, final paystub and a W2. A paystub is the check that your employer issues you with when giving you your salary. It includes your pay details, and the whole year to date payroll. The paystub has your deductions and also taxes that have been removed out of your total earnings. After the things have been removed, the paystub gives you details of your net earnings and your pay check money. A final paystub is the last paystub that you are given at the end of the year. It shows the net and gross income you have made the whole of that year. A W2 is just a tax form that gives a list of all the amount of taxes that has been withheld from your pay check the whole of that year. It includes the federal and state taxes and it is also a very important part of filling the tax return.
A W2 form shows you the amount of taxes that have been taken out of your pay check and shows you the net income you have made throughout the year. It is good to train yourself on how to calculate your W2 from one of your paystub instead of waiting for it. You can get all the details about the overall income although the digits will not match with the one in your W2 form.
Instead of waiting for your W2 form you can learn how to calculate it by yourself. Make sure you find your gross income.The very first step is to find your gross income before doing anything else. This is the first step because you find all the amount of money you have earned the whole year having no deductions and tax holdings by calculating the gross income. A lot of people calculate their gross income by multiplying the number of hours in a week with an hourly rate. The second step in finding your W2 is to subtract your non-taxable wages. Income taxes, federal and state free wages are the ones known as non-taxable. Some examples of non-taxable wages include federal and state insurance and gifts too. Add them all then subtract from gross income. Account for other deductions by subtracting from the number you got in step two. Determine your whole year taxes then calculate your w2 from paystub.
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