Of importance when filing the tax returns is the knowledge of calculating the W-2 wages. This article has outlined the procedure for determining the W-2 wages from a paystub hence you ought to read it.
A determination of the gross income ought to be the first step to be carried out. A computation of the gross income will involve addition of all the wages to be paid. On this gross income, there will have no deductions of any form made. This is the amount of money which will be indicated on the paystub. If your income will be payable on an hourly basis, the procedure for computing the gross income will include multiplying the hourly pay rate with the number of hours which you will have discharged the services. It could as well be the total monthly salary which you will get. The bonuses, commissions and the overtime work done pays will have to be included here.
The income which will need not to be subjected to taxation will have to be deducted from the gross income. Those wages which will not be subjected to taxation are the non-taxable wages. Gifts, insurances or the disability benefits are some of the examples of the non-taxable wages. The total non-taxable wages will have to be obtained by summing up all these wages. The next step will be to deduct the wages which will need not to be taxed from the gross income.
The third step will be to examine the additional deductions. On your income, there are wages which will have been initially taxed hence you will have to omit them from the part which will make up the total taxable income. Subtraction of the pre-taxed wages from the total taxable income will be a very important step. Some of the pre-taxed wages among the others are the employer benefits and the insurance and this will be noted on the paystub.
The fourth move which ought to be carried out will be to compute the total yearly taxes. The taxes which will have been withheld will have to be noted. The taxable income minus the paid taxed wage will result to the total taxes charged. You will then have to multiply these amounts with the number of times you will be paid within a year so as to get the annual taxes you will have remitted.
The last step will be to compute the W-2 earnings. From the annual taxable income, you will have to subtract the total annual taxes so as to get it. This last figure that you will get is the net annual income.
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