Have you filed your tax returns yet? They can be a pain to fill in as they require collating lots of different documents and forms and sometimes having to pay back some money to the IRS if you’ve overpaid.
How to use pay stubs for taxes is something we put to the back of our minds. But filing in your tax returns early and knowing how to use paystubs to help you can bring you peace of mind.
Here’s everything you need to know.
W2 Or Pay Stubs
Many people often ask if you need a W2 form or pay stubs to fill in your tax returns for the IRS. You often have to wait for a W2 form from your employer or they have forgotten to give you one. Dealing with HR or accountants can be a nightmare if you work for a big company.
Although a W2 form can give you all the information you need, your pay stubs can also be used for filling in tax returns. The great thing about pay stubs is that you can use a pay stub creator to generate your own online, avoiding the need to wait for others.
Filing your tax return online with a pay stub rather than a W2 form is perfectly legitimate and can help save you time and ensure you get organized early in the year rather than leaving your tax returns to the last minute.
Filing your tax returns is also important right now because your payroll status could determine your next Corona Virus stimulus check.
File Your Taxes
Now that you’ve established that you can use pay stubs to file your tax returns and have generated your own to help you, it’s time to begin the process of actually filing your returns.
If you’re wondering ‘how to use paystubs at tax time?’ then the best way is to use them to file taxes online.
Filing taxes online is the most straight forward way of dealing with the situation. You can avoid the time and hassle of sending endless letters and correspondence to the IRS that might get lost in the mail.
Remember though that you can only file your taxes online if you earn less than $57,000 a year in gross income. If you earn any more than this then you will have to submit a paper claim.
If you live in a U.S overseas territory such as the U.S Virgin Islands or Guam you are going to have to file by paper and mail as well.
What to Look For On Your Pay Stub?
If you are wondering what to look for on your pay stub to file your tax returns then here’s what you need to know.
First of all your pay stub should list what tax deductions you have so that you don’t overpay your tax. These are usually listed in shorthand – as abbreviations or a code – on your pay stub. For example, tax deductions for healthcare, Medicare, should be listed as MEDI and state income tax should show up as SIT.
It’s up to you to investigate what the abbreviations on your pay stub mean so that you can properly understand your pay stub and file your tax returns correctly.
You might even be eligible for a tax refund for the IRS so be sure to make a note of these when filling out your tax return.
Another critical piece of information is your income which will be listed as weekly, monthly or bi-weekly depending on the arrangement you have with your employer. The IRS needs to know how much you earn in any one pay period.
You also need to list any overtime you’ve done to make sure this is counted in the overall calculation about your tax.
Use a Tax Calculator or Hire an Accountant
Are your tax affairs more complicated than being paid a fixed amount by one employer? Maybe you work for one employer but also do freelance work for another? Perhaps you also own your own business that you manage in your spare time?
This can make filing your taxes more complicated than simply using pay stubs for taxes. You may need several different forms and to do some tricky calculations.
There are special tax calculators online for those with more complex tax arrangements who feel confident filing them in themselves.
For those with their own business, it can be worth hiring an accountant instead to ensure that you file your tax returns correctly. Underreporting your income and earnings can land you in trouble with the IRS and could mean you get a file or even have to go to court.
How to Use Pay Stubs? Generate Your Own
How to use pay stubs at tax time? Be smart and generate your own online. Don’t wait for your employer to send you a W2 form as this could take time and you could end up wasting time dealing with HR or accounts.
Instead, the information on a pay stub, even if you generate it yourself, can provide you with all the information you need to file a tax return. Be sure to look for the deductions and make sure you understand what each abbreviation means and to include any overtime you’ve worked.
If your tax affairs are more complicated because you work for a company and you also have your own small business or you work for many companies, considering hiring an accountant or using a tax calculator.
This will ensure that your tax returns are accurate and that you don’t under or overreport your earnings.
If you are interested in reading more about how to use pay stubs be sure to check out the rest of our site.