Steps Involved When Calculating W2 Wages From Pay Stub.
People not convenient with the process of filing taxes can be challenged when doing the task. Luckily enough, an individual’s pay stub does contain all the necessary information that they could require for their W2. Thus for an individual to determine the amount of tax return they are entitled to, they can easily do so by tracing this information in their pay stub. When determining ones taxable income, first one calculates the totals up to date on their latest paycheck. Remember, to enhance enough accuracy, one should get the given information from the year’s last paycheck and on the same taking care that it is not the latest pay period number that the individuals are using. Again you may need to have the totals of every wage that you stood to earn that particular year and the amount adjusted if one had any exclusive deductions from taxable income. The exclusive deductions could be: health insurance premiums, reimbursement accounts for dependent care, group life insurance premiums and premiums for dental and vision insurance among other deductions.
The given items are each subtracted from individual’s gross taxable income to give a number that is equivalent to box one of one’s W2 on reception. This same process is followed when an individual is calculating their state taxable income and if the information happens to be incorrect, they may have to contact their company’s payroll department to get an explanation why it is so. Regarding determination of taxable wages, for one’s medical care and social security, the process involved is similar to the one applied in determining their taxable income. The only variation is attributed to the fact that in the tax involving social security there is some given amount of individual’s income. Some of the pre-deductions involved in the social security tax and medical care include: life insurance premiums and dental, medical or vision insurance premiums. During the calculation, remember to deduct any paid benefits for employers that the persons may have obtained during the year.
During the calculation of W2 wages, individuals should note that for an average person, tax time may happen to be confusing as it is not cut and dry at all times. One should also know that one’s personal expenses and exemptions during the year is what will determine each of their tax return and that use of a pay stub when calculating W2 wages is just but an estimate. Essentially, know that you usually use your gross pay then remove the necessary pre-tax deductions when determining state and federal taxable income. However the numbers may differ basing on an individual’s particular situation as one could have inclusive personal exemptions.