When you create pay stubs, you are not only making paycheck stub online but fulfilling your responsibility and releasing yourself from worries. 2018 is about to end soon and tax season is arriving in no time. It is the time of the year to calculate your wages and prepare the earning statements beforehand as you might have to file W2 Forms and 1099 Form after that.
Let’s see how it helps in calculating wages smoothly and gets you sorted.
Create Pay Stubs & Sort Managing Income
It takes few minutes to Create Pay Stubs but its impact is much more. If you are regularly creating paychecks then you will already hold a digital copy of that respective paystub which can be printed instantly. One should always take care while using online pay stub that the entered information is to-the-point and accurate. This will further assist you in filing tax returns with precise details.
Related Read: How Paycheck Stubs help in managing company finances?
How a Pay Stub assists?
The Paycheck stubs come with the information like your take-home pay and employee deductions like Federal Taxes, Medicaid, Social Security, and State Taxes.
Determine Gross Income
It is required to determine the gross income first. As it is about the wages, the hourly rate is multiplied by 40 hours per week. It will also reflect the number of hours worked overtime, the commissions and bonuses per pay period. So, you need to sum up your gross earnings which you will need to enter in check stub maker. Basically, this is your basic earnings which are available before any kind of deductions, calculations, and withdrawal of taxes.
Deduct Non-Taxable Wages
You might get surprised that some states don’t even have state, federal or income taxes. Gifts, State without Income Tax, Partnership Income, Disability Wages and Employer Insurance are included in this. Gross income is deducted from the total of non-taxable wages. Also, it should be known that these conditions might not apply to all. Income from scholarship and tuition-fees are non-taxable. Against this, if you are renting a room is subject to taxes.
Determine the Deductions
Pretax deductions are the ones for which you are eligible and they also help lower your taxable income amount. Life Insurance, Health Insurance, Retirement Accounts, Employer Benefits, and Transportation Programs are the instances. The aggregate is subtracted from the amount achieved after deducting non-taxable wages.
Here, the total figure after deductions should match the amount in Box1 of W2 Form when it arrives. If you find any mismatch, you can ask for the clarification from the payroll department. You will finally get annual income which is subject to Federal Tax.
Estimated Annual Taxes
Check your Pay Stub’s current tax column and write down the local, state and the withheld income taxes. You need to multiply your pay amount with that particular pay period. For instance, you have to multiply by 12 months if you’re getting paid monthly. This way, you will get an overview of the tax amount to be withheld for that particular year. You can then identify if you’re qualifying for a tax refund or not.
It is very easy and convenient to determine your taxable income and understand your wages with these four simple steps and pay stub generator. Also, keep in mind that not all pay stubs are the same because the wages differ from job position, employee’s performance, and company.