The tax season can be a very stressing time for most businesses. Understanding the tax process can be a problem unless you know the tax process. When it comes to a tax returns preparation, you will need the information that is on the W2 form. If you don’t have the W2 however, you can go ahead and get this information from your paystubs. A W2 informs you of how much taxes have been taken out of your paycheck. You will always understand the total amount of net income you have made that year using a W2. If you don’t have a W2 form, you don’t have to wait to know how much net income you have made. You can follow the steps below to use your paystub. Visit https://www.thepaystubs.com to know more.
You can first calculate your gross income. Gross income is the money you have received without calculating deductions or tax withholdings. You can go ahead and multiply the hourly rate you get with the number of hours in that particular week. Your paystub can show you the total amount of money you will spend. You can also see the rewards, commissions and overtime hours in your paystub.
The next step will be to deduct all non-taxable wages. You can get the total amount of non-taxable wages and deduct them from your total amount of gross income. Non-taxable wages are the wages that are subjected to federal, state or income taxes. Examples of non-taxable wages include partnership income, disability wages, gifts or insurance of the employer. You can go ahead and add all the non-taxable wages and then subtract them from the total gross income. Check https://www.thepaystubs.com for more info.
When you decide to calculate W2 wages from a paystub, you can go ahead and account other deductions. Everyone is eligible for pretax deductions. These are the ones that lower the amount of the taxable income they earn. These deductions include life insurance, retirement benefits, health insurance and employer benefits. You can find the total number of deductions on the paystub. You will need to find the total amount of these deductions and then subtract them from the number you got from the last step. This is your taxable income from that particular year. You can then go ahead and determine your yearly taxes. All the local, state and income taxes that have been withheld from your earnings can all be found from your paystub. You can then multiply these taxes with the amount of income you receive every year. The last step will be to calculate your W2 earnings. You can do this by subtracting the total taxes from the amount you got from step three to get the net income for that particular year. Read this article about income stub: