Paycheck as W-2 Income
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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.
Your paycheck is your first source when estimating your and spouse's federal tax withholding - see line 6 below - via the new 2020 W4 form. Of course, if you have additional taxable income, you can include this as well. Start with the eFile.com PAYucator a when you complete the new 2020 W-4 form. When done use the WITHHOLDucator and taxercise you paycheck and define your Tax Return goals for the given tax year: More or less Tax Refund, Taxes Owed or to be Tax Balanced?
Sample Paycheck Line Items
- 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 use the PAYucator or WITHHOLDucator.
- 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
The Form W-4 is a form you complete here on eFile.com 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.
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 return goals, you may need to adjust your W-4 or federal tax wittholding several times a year.
- Decrease your Tax Withholding amount (increases your net paycheck) by increasing section 3 and 4b on your W-4. You might owe taxes on tax day - or get less of a tax refund - be aware that by increasing section 3 and/or section 4b 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 section 3 and/or section 4b on your W-4. This would result in increasing your Tax Withholding (decrease your net paycheck). Before you or when you do this, you should estimate your Tax Return for the given tax year. If you expect a large refund would mean you are handing too much of your hard earned money to the IRS only to get it back in form of a refund. Most States also require you to complete a State Tax Withholding Form.
How Do I Know How Many Allowances to Claim to Meet My Tax Goals?
Use the free efile.com
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