Looking On The Bright Side of Taxes

Finding Your Net Annual Income by Simply Using Your Paystub

You can easily calculate your net income with the use of the W2 form. Waiting for your W2 form to arrive can give you anxious thoughts whether it will arrive on time or delay your submission of your tax returns. You don’t have to wait for the W2 form to calculate your net income; a simple paystub can help you with the figures. You simply need to apply basic math using figures in your paystub to calculate W2 wages. Find out how below

Every time you get your salary, there is a paystub that accompanies it which shows how much you earned for that period and the year-to-date payroll. Included in the paystub are the deductions taken out from your wages and what is left from the paycheck.

You final paystub is what you get at the end of the year. In this final paystub, you will find your gross and net incomes for the entire year.

The firs thing you need to know is how much gross income you’ve earned. You final paystub shows your gross income and this includes your monthly salary plus the extra overtime hours, bonuses, or commissions.

After finding your gross income, determine non-taxable wages and subtract it from the gross income. Non-taxable wages include disability wages, partnership income, employer insurance, or gifts. Add all these up and subtract it from your gross income.

You also need to determine your other deductions. There are many people wo are eligible for pretax deductions that can lower their taxable income amount. Employer benefits, retirement accounts, health insurance, life insurance, transportation programs, etc. are some of the other deductions that can be applied to your gross income. Check your paystub and find out how much deductions you can make. Then subtract this amount from the result of the previous step. This figure that you get after deduction is your total taxable income for the year.

Then find out the total taxes withheld from your income the whole year. You can find a figure on your paystub that reflects how much tax is withheld every pay day. You need to multiply this amount with the number of times your are paid each year. A workers who receives wages every 15 days receives his salary 24 time a year. Multiplying the tax withheld every payroll by 24 gives you the total tax withheld the entire year. The total tax withheld should then be subtracted from your total taxable income calculated in the third step. The amount that you get is your net income for the entire year.

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