How to Calculate Taxes Withheld on Your Paychecks

With tax season coming around the corner, everyone is rushing to their tax preparer to file for their tax returns for 2008. Whether you use Turbo Tax software, a CPA or go to H & R Block to file your tax returns, one of the most necessary information you need is the amount of income taxes paid for the tax year. If you received 1099's, you are supposed to have been paying your estimated taxes quarterly.

Difficulty: Easy

Instructions

Things You'll Need:

• Paystubs
• W-2 forms

1. For those who work for others and get a salary, they receive paychecks from their employer. Whether you got paid weekly, bi-weekly or monthly, your paychecks will show the amount of taxes paid for that period of time you worked. You may have changed employers during the tax year and received paychecks from each employer you worked for last year. There are gazillion entries on those paychecks than our finger can count; and all you know is that you always take home a lot more less than what you think you earned. There are different deductions from federal down to local government. How do you calculate the taxes you have paid from your paychecks?

2. There are usually two types of income taxes we pay. Some of us are more fortunate than others that they do not have to pay their local state income taxes. They only pay the federal income taxes. In some states, tax payers also pay local state taxes on their income.

3. When you look at your paychecks, you need to find the Fed W/H (Federal Tax withheld), in other words, federal income taxes you paid. This is the amount of taxes you have asked your employer to withhold for you every time you get paid. The withheld taxes are determined by the number of exemptions you entered on your w-4 form. If you have to pay state income taxes, you will find it under __St W/H. For example, if you live in California, CA St. W/H.. These are the only items that count for your income taxes paid.

4. There are usually two columns on your paychecks. First one shows your earnings, taxes and all other deductions for your current paycheck. The second one shows you your YTD (Year to date) earnings, taxes and deductions. Most likely, the YTD fed W/H and YTD Local St. W/H is what you need to add up to calculate your taxes paid on your paychecks.

[jenng]

on 11/14/2009 Great article on How to Calculate Taxes Withheld on Your Paychecks 5*