Using Your Pay Stub for Tax Filing

Tax filing can be quite stressful and is done every year. While using pay stubs for tax filing is possible, it starts with having all the necessary documents available. You also need to know all the deductions that concern you as an employee. 

This article explains what you need to know about using pay stub for taxes and how to use pay stubs for tax filing. We’ll also discuss the appropriate form to use to file your taxes. 

Understanding Your Pay Stub

A pay stub is also known as a payslip. It is a document that outlines what an employee earns in a particular pay period. A pay stub helps employees keep track of their income.

It includes employee pay details like gross pay, net pay, taxes withheld, and deductions for benefits or contributions. It also lists the names and addresses of the employer and employee. It shows the number of hours they work and their pay rate.

While no federal rule requires employers to issue pay stubs, many states mandate that they do. Employers often give employees pay stubs. These can be digital or printed. This usually depends on the company policy or state requirements.

As an employee, you need to know every detail of your pay stub. This helps you understand your exact earnings and your taxes to be deducted. Since it provides you with a clear understanding of all of your taxes, you'll know how to file your taxes.

Your pay stub helps you track deductions like garnishments, insurance payments, and retirement savings. Therefore, reading and understanding your pay stub allows you to stay in control of your finances.

Can You Use Pay Stubs for Tax Filing?

To file for your taxes, you'll need a W-2 form. You can also use your final pay stub for tax filing if your W-2 hasn't arrived yet.

How to Access Your W-2

According to the law, employers must issue W-2 forms to their employees before the 31st of January. Some of them even make these forms available online before then, so you might be able to access your form early.

You can also get your W-2 details by going to the IRS website. Choose the "Get Your Tax Record" option. You can then view your income and wage records, including the information that is usually on your W-2.

However, if you notice that there's a mistake on your W-2 form, reach out to your HR department immediately. Your employer must now correct and reissue your form.

How To Use Pay Stubs for Tax Filing

Using pay stubs for tax filing yourself can be quite stressful. Especially if you aren't an accountant or you aren't using any payroll software. When using your pay stub for taxes, you must know your tax info, deductions, and income. You need basic knowledge of how the process works.

Here's a step-by-step guide to help you:

1. Gather All the Right Documents

First, you need to gather all the documents that you need to file your taxes. When you have these documents available, you can save time and avoid errors. You’ll need your Social Security number, your last federal return, and a valid ID for your dependents. If you have a child as a dependent and are not the custodial parent, ensure you have Form 8332.

Also, provide your last pay stub, which should include year-to-date totals. If you've made tax-deductible investments like IRAs or participated in tax-sheltered annuity plans, gather those documents, too. Provide your health insurance documents as well to show your health coverage.

2. Add Up Your Income

It is important to understand how much you earned during the year. This includes your salary, bonuses, overtime, and other compensation.

3. Know Your Deductions

Deductions reduce the amount of tax you owe. They include the tax information on pay stub. This refers to your pre-tax and post-tax deductions. Pre-tax deductions are the taxes taken out before your income is taxed. Examples include contributions to retirement accounts like 401(k)s, health savings accounts, and insurance.

Post-tax deductions are the taxes taken out after withholding tax. They include child support payments or wage garnishments.

4. Pick the Right Tax Form

Using the correct tax form ensures you're reporting every detail properly. Some of the tax forms include:

• W-2: This is the main wage and tax information given by your employer.

• W-4: This is the form employers use to withhold federal income tax.

• W-9: This form is used when you're providing your taxpayer identification number.

• Form 1040: This form is useful if you earn income that is not subject to withholding.

• Form 941: Typically used by employers to report employees quarterly federal taxes.

• Form 4852: You can use this form as a substitute if you didn't receive your W-2.

• Form W-7: This form is used to renew your taxpayer identification number.

5. Fill Out the Form Carefully

When doing this, make sure that it is accurate. When there are mistakes, it can lead to audits, delays, or stressful filing amendments. Double-check your income and deductions to make sure they match what is in your records.

6. Submit Your Tax Return

Once you have completed and reviewed everything, you can then go ahead and file your return. If you're using your pay stubs for tax filing because your W-2 is missing, ensure all details are accurate. If you find any discrepancies later, you can file for a tax return.

Common Mistakes To Avoid When Using Your Pay Stub for Taxes

Take note of these mistakes that you can avoid when using pay stubs for tax filing: 

• Depending Only on Your Pay Stub: Although you use pay stubs for tax filing, it is not advisable. Your pay stub often lacks all the information you need for tax filings. This is especially true for deductions, tax credits, and local or state tax withholdings. You need your W-2 for this.

• Ignoring Payroll Standards: For businesses in different countries, correctly managing payroll can be tricky. Employers should consider global payroll standards. They must ensure they handle employee taxes, benefits, and compensation accurately across countries. It can become an issue if they do not follow international standards and are tax-compliant. 

• Not Double-Checking Your Details: Before you file your taxes, make sure everything adds up. This means you should confirm your personal details and other documentation to be sure that they're correct. Once your tax return is submitted, you have a limited timeframe, which is 30 days, to verify the filing.

Your tax filing might be rejected if you have mistakes, mismatched information, or missing forms. You may have to repeat and start the process all over again. Take your time to gather your documents.

What Other Forms Can You Use Apart From Your W-2?

If your W-2 hasn't shown up and you're trying to meet up with the tax deadline, don't worry. There is an alternative to this. Instead of using your W-2 form, you can use the IRS Form 4852, which you can find on the IRS website. You, however, need your recent pay stub to fill it. Your pay stub should list your total earnings, Social Security and Medicare wages, and the federal income taxes withheld for the year. 

Once you've filled out the Form 4852, attach it to your Form 1040. You can also use any other tax return form and submit it to the IRS. This form also helps if your employer already gave you a W-2 but has the wrong tax information.

Note that when filling out your form 4852, you need to ensure it is as accurate as possible. If it's inaccurate, there could be penalties by the IRS. So, double-check every detail.

In Summary 

Knowing how to file your taxes is important. You could use your pay stubs for tax filing because it contains certain tax information. This information includes employee details that you should pay attention to when filing your taxes. This helps you manage and control your taxes. 

Our pay stub generator helps you create accurate employee pay stubs for your tax filings. It contains all appropriate tax information. It generates it immediately, providing professional pay stubs for employees. Use our tool today!