Paycheck as W-2 Income
Click image to enlarge
Did you receive your first paycheck, but don't understand all the items on the paycheck? Click on the image on the right and learn about sample paycheck line items. Keep in mind paychecks vary in format but not in substance.
- 1-Employer Name and Address: This information is required when you prepare and efile your income tax return. It should also match your W-2.
- 2-Payment Period: It should match what's listed on your W-2 from your employer.
- 3-Employee Information: Your name and address.
- 4-Filing Status and Current Allowances: Your current filing status and allowances - change them via the W-4 you submit to your employer.
- 5-Pay Rate: Your current and year-to-date gross pay rate.
- 6-Federal, State Income Tax and Other Withholdings: Estimate your federal taxes withheld for the year when you estimate your tax refund via the Tax Calculator.
- 7-Net Pay: This is the payment amount you will receive as a check or bank direct deposit after your tax and other withholdings.
- 8-Other Benefits: Vacation, Sick time benefits year-to-date etc.
You can decide whether you want a refund, owe taxes, or be tax balanced when you file your tax return by reviewing and updating your federal W-4. You can do the same for your state income tax withheld.
W-4 or Tax Withholding Form
Form W-4 is a form you complete and give to your employer. Your W-4 lets your employer know how much federal and/or state tax you want withheld for each pay period. The amount you want withheld from your paycheck is your allowance (or allowances).
You may want to balance your withholding so your refund comes from refundable tax credits and other tax breaks rather than from having too much money withheld from your paycheck. To accomplish your tax goals, you may need to adjust your allowances several times a year.
- Decrease your Tax Withholding amount (increases your net paycheck) by increasing your allowances on your W-4. You might owe taxes on tax day - or get less of a tax refund - be aware that by increasing your allowances too much, you might end up owing taxes when you file your tax return because you did not have enough money withheld from your paycheck during the year.
- You may want to decrease your allowances on your W-4: That way, the amount that you do not owe in taxes will be given back to you by the IRS as a tax refund. However, having a refund too large would result in the IRS keeping too much of your money before giving it back to you.
How Do I Know How Many Allowances to Claim to Meet My Tax Goals?
Use the free efile.com
Taxes Too Taxing?
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