How An Employee Can Calculate W-2 Wages From A Pay Stub?

A W-2 form is also spelled as a tax statement. It is a legal document, an employer or business owner is responsible to provide it to each of his employees and to IRS (Internal Revenue Service) at the end of the year.

This form is used in the United States to keep the record of employee’s wages and taxes that are withheld from the employee’s paycheck stub maker in USA. 

The Employer must complete the W-2 form of employees or independent employees to whom he is paying salary, wages or other compensation as it is also the past of employment relationship.

It will help to analyses how many taxes each person is paying to the government and also make the record of net income that have made throughout the year. It is very simple to utilize this form yourself if you have all the required information correctly.

Input your gross wages:

For analyzing the W-2 form it is compulsory to input your all gross wages. It is the total amount before any deductions or tax withholdings that an employee had made throughout the year. Paystub templates also show extra wages like overtime, an extra hour, commissions and bonus, etc. 

Deduct Non-taxable wages:

Once an employer used this form to fill, he will show this option. It doesn’t include any government tax like federal, state, income tax on stub maker.

 It might include other deductions like the contribution to any organization, disability wages, insurance, partnership income, and gifts, etc. all these non-taxable wages should be added in the form and then subtract the amount from the gross wages.

Add other deductions:

Not everyone is eligible for this type of deductions. These deductions are taken only from the eligible person as it lowers the amount of taxable income. 

It may include health insurance, employer benefits, dependent life insurance, short term, and long term disability, supplemental life insurance, accidental death, retirement plans transport programs, pensions and more. An Employee can easily find the total of these deductions on pay stub templates.

You should subtract this from the number that you get in step two. If you already have the W-2 form then the amount will automatically match with the Box-1 on your form. Now it is your total taxable income for the entire year.

Determine yearly taxes:

In this step, you can find the total amount of local, state and income taxes that are directly taken from the taxable income. The next step is to multiply these numbers with the number of times an employee gets paid each year.

Calculate W-2 earnings:

This is the last step when filling the W-2 form. It subtracts the total amount of taxes that are withheld from the income and other deductions that are calculated in step three. The numbers at the end you get in the W-2 is the net income. Employees are free to enjoy their net income.

It is not difficult to find out what is your taxable income as you only required some basic math skills and little knowledge of how can you calculate W-2 wages using paycheck stub maker in USA yourself. If your calculation doesn’t match with numbers on the W-2 form, then you need to go to check the mistake in your math figures.