The Process of Calculating W2 Wages From Pay Stub.
If one is not convenient with the procedure of filing taxes, it can be a tasking job for them. Luckily, ones pay stub contains all the necessary information they could be required 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 calculating an individual’s taxable income, they first do the totals up to date on their latest paycheck. To ensure that you are accurate enough however, derive the given information from the year’s last paycheck taking caution that it is not the latest pay period number one is 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. Some of the exclusive deductions could be: health insurance premiums, reimbursement accounts for dependent care, group life insurance premiums and premiums on dental and vision insurance among other deductions.
The specific items are then each subtracted from ones gross taxable income to give a number similar to the one in box one of the individual’s W2 on receiving. A similar procedure is followed when one is determining their state taxable income and when the information appears to be incorrect, they may have to contact their company’s payroll department to obtain 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 slight variation is facilitated by the fact that in the issue of tax on social security, there is a reasonable amount of the person’s income involved. 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. Again, during the calculation, individuals should not forget 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. Again remember that one’s personal expenses and exemptions during the year will determine each of their tax return and that use of a pay stub when calculating W2 wages is just but an estimate. Most importantly, remember that you use your gross pay then remove the necessary pre-tax deductions during the determination of state and federal taxable income. Meanwhile the numbers may seem to differ based on a person’s particular situation as one could have inclusive personal exemptions.