Some people do not start their tax process until they get their W2 form. You should have your W2 so as to prepare your tax return. 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 a paystub and W2. Your final paystub does not match your W2 if you do not know the difference. To avoid all these confusion, it is good to know the difference of this two documents.
Make sure you know the difference between a paystub, final paystub and a W2. A paystub is that pay check you get from your boss anytime you get your salary. The paystub has your pay details and also your payroll for the whole year. The paystub has your deductions and also taxes that have been removed out of your total earnings. The paystub has details of your net earnings and your pay check money. A final paystub is the one given when the year ends. The gross and net income are included in the final paystub. 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.
The amount of taxes that have been taken from pay check and shows the net income you have had throughout the year. Make sure you learn on how to calculate your W2 from your paystubs. This will not give you exact digits like the ones intneW2form but be sure to get all the information to figure out the overall net income on your own.
Here is a simple procedure on how to calculate your W2. Before doing any step make sure you calculate your gross income. 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. What most people do is calculating their gross income by multiplying their hourly rate with the number of hours in a whole week. Make sure you subtract the non-taxable wages from your gross income. Income taxes, federal and state free wages are the ones known as non-taxable. They include things like gifts, partnership income or insurance. Add all of them taxable wages then subtract from gross income. Use step two to subtract other deductions. Determine your whole year taxes then calculate your W2earnings.
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