You can easily calculate your net income with the use of the W2 form. But sometimes there is a delay in receiving your W-2 and when this happens, you wait anxiously for it hoping that it arrives in time before the tax deadline arrives. The good thing is that even without the W2 form, you can actually calculate your net income or W2 wages from your basic paystub. With just a paystub in hand, you will be able to calculate W2 wages using just your basic math. Check the procedure below.
You get a paystub every time you receive you wages and this shows you how much you earned for that payroll period and the total you have earned so far. You can only find here how much was deducted from your salary and the net salary you get for that paycheck.
At the end of the year, you get your final paystub. In this final paystub, you will find your gross and net incomes for the entire year.
Your gross income is the first thing you need to determine. Your final paystub will show your gross income which is the sum of all your regular wages including your 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.
Now consider 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. This total should be deducted from the amount you got in the previous step. This amount reflects your total taxable income for the year.
Then find out the total taxes withheld from your income the whole year. Every paystub gives you a figure of total taxes withheld. How many times are you paid the whole year? Multiply that number with the tax withheld indicated in your pay stub. A workers who receives wages every 15 days receives his salary 24 time a year. The total tax withheld from your income the whole year is the tax withheld per payroll times 24. Then you need to subtract the total tax withheld from your total taxable income. The amount that you get is your net income for the entire year.