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Taxes are an inescapable part of your earnings and the government’s revenue. The taxes you file ultimately run the country, sponsor social schemes, and build the nation. However, filing taxes is not easy, especially if you’re doing it without professional help or global payroll assistance. You must calculate your income, deductions, and other benefits before filling out forms like W2.
With a correctly filled out W2 form, you can file your taxes. But what if you do not have a W2 form? How do you file your taxes with or without the W-2 form? Here’s your way out of the challenges—using your last pay stub. In this blog, we’ll guide you through the process of compliantly filing your taxes using a pay stub. Read on to discover the challenges and step-by-step instructions to avoid them, ensuring accurate and timely tax filing.
Understanding Your Last Pay Stub
Before answering the main question, “How to file taxes with the last pay stub,” let’s get familiar with what a pay stub is.
What is a Pay Stub?
Simply put, a pay stub is a salary or pay slip. This official document contains information about your earnings and deductions for the time. It is provided by your employer, either on paper or electronically, depending on their preference and law compliance.
You can use a pay stub to confirm your gross pay, taxes withheld in the net pay, and any deductions. While there is no federal obligation on the employer to provide pay stubs, most states impose the provision.
Components of a Pay Stub
The information mentioned on a pay stub might vary from one employer to another, but they generally mention your gross pay, deductions, taxes, and net pay for a particular period. Let’s get familiar with the components individually.
Gross Pay
Gross pay is your pre-tax and deductions earnings, including all benefits you might have received from the employer.
Deductions
Deductions are funds that are withheld from your gross pay. This could include contributions to a retirement plan, insurance premiums, for paying taxes, or garnishments/benefits.
Net Pay
Net pay is your post-tax and deductions earnings or the amount you take home. It is computed by subtracting all withholdings—taxes and deductions from your gross pay.
Pay Stub and Taxes
As pay stubs contain three major sections: your earnings, taxes that you pay, and any other deductions prior to net pay calculation, they are a vital part of your payroll management and tax filing routine. The document is particularly helpful if you’re new to filling out tax forms, especially the IRS W-4 and W-2 forms.
Why It’s Important to Understand Your Pay Stub
You must clearly understand your pay stub before seeking answers to how to file taxes with the last pay stub. Knowing your pay stub helps to
Have more transparent earnings and deductions.
Verify the accuracy of calculations, tax withholdings, and incorrect deductions.
Estimate your annual tax liability and plan tax filings ahead of time.
Track additional garnishments (third-party deductions) and benefits like health insurance premiums, retirement contributions, etc.
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Can You Use Your Last Paystub to File Taxes—Without a W-2 Form?
Having your last pay stub gives you clarity on how much you owe and whether you are eligible for a refund. So the direct answer to your question, “Can you use your last check stub to file taxes”—is Yes.
But there’s a noteworthy point; you need to have a W2 form if you wish to file taxes using your last pay stub. An IRS W-2 Form is a document submitted to the Internal Revenue Service (IRS), reflecting payroll information of the previous time period.
Can You File Taxes Without a W-2?
You cannot file your taxes without a W2 form because the last pay stub alone may not accurately represent your annual income. It could potentially lack some or the other information that is imperative to the tax.
Additionally, if you file an income tax return based on only the last pay stub, then you would be expected to file the return again. This adds to the cost of tax fees and takes longer to refund.
However, in the absence of W2 forms, taxes can be filed using the last pay stub and form 4852, available on the IRS website. But you have to inform IRS if you choose this route for filing taxes.
The process might be overwhelming if you’re not very familiar with doing taxes. But there is nothing to worry about; we are here to help you.
Step-by-Step Guide to Filing Taxes Using the Last Pay Stub
Filing taxes can be demanding and time-consuming, especially if you are doing so without any professional help or a global payroll service. It also requires a rudimentary understanding of how to fill out tax forms, wage statements, withholdings, and compliances.
Mentioned below are the steps that entail a tax filing process.
Gather All Necessary Documents
When filing taxes, keep all tax-related documents handy. Here is a list of documents you should have ready.
ID Proof: Basic information that tells IRS about you and your employment. For example, social security details, a copy of last year’s federal tax returns, a dependent’s ID (if you’re dependent on someone), Form 8332, if you have a child dependent on you and their custodial parent, has released all the rights.
Salary Stubs: Salary slips are essential as they help break down the gross pay into taxes, deductions, and net pay. Ensure it includes year-to-date figures for your income and tax withholdings.
Other relevant documents
Tax-saving Investment Proof: If you have any tax-saving investments, Pub. 571, Tax-Sheltered Annuity Plans, Pub. 575, Pension and Annuity Income, Pub. 590-A, contributions to Individual Retirement Arrangements (IRAs), etc., carry the proofs.
Health Insurance Premium Receipts: Health insurance premiums are eligible for tax deductions. You can use Form 1095-A, Form 1095-B, or Form 1095-C to show your health insurance quotes.
Calculate Your Income
You must have a clear understanding of your total earnings before and after deductions for a particular work period. This includes regular work hours, overtime (if applicable), bonuses, and other kinds of compensation.
Determine Deductions
Different kinds of deductions have different impacts on your taxable income and your total tax liability. The most standard difference is whether it is a pre-tax or post-tax deduction.
Pre-tax Deductions: Deductions taken from your gross income before withholding taxes. It reduces income, in turn reducing the taxable income. Examples include contributions to 401(k) retirement plans, flexible spending accounts (FSA), group-term life insurance, etc.
Post-tax Deductions: Deduction taken from your net income after taxes are withheld. Examples include wage garnishments, child support, etc.
Choose the Right Tax Form
Opting for the correct tax form is vital for several reasons, as it directly impacts how accurately your taxes are filed. You must spend a reasonable amount of time reviewing the IRS guidelines or consulting with a global payroll platform before filling out a form. Below is a list of commonly used tax forms to make the work easier.
Be very careful while completing the tax form. As a taxpayer, it is a legal obligation to report your true income and deductions to the government. Filing an inaccurate tax return may increase the likelihood of being audited by tax authorities. Moreover, an incorrect tax filing also adds to your burden of redoing the entire process in case of any discrepancy.
Submit Your Tax Return
Prepare and file your tax return using the information from your last pay stub or the tax form you filled out. Please review all the details and ensure they match your form's information. You may need to amend your tax return using Form 1040X if there are any discrepancies.
Common Mistakes to Avoid When Filing Taxes with a Pay Stub
Relying Solely on the Pay Stub
While using a pay stub is permissible in certain situations, it's always better to have a W2 form. This is because pay stubs may include only some of the information needed to claim deductions and credits accurately. Moreover, they typically show federal income tax withholdings but may not include state and local taxes. Hence, relying solely on your last pay stub is not wise.
Ignoring Global Payroll Practices
Global payroll practices cater to employee compensation and benefits management across borders. Especially for companies that have a diverse and remote workforce, following these practices is central to seamless management and tax compliance. In their absence, it might be challenging to reimburse the employees accurately and timely in a tax-compliant manner.
But it might be a complex and work-intensive process if you’re manually doing it on such a big scale. In such cases, a global payroll service provider can help you.
Failing to Validate Information
It is crucial to validate all necessary information like your bank account details, Aadhar, and PAN card details. Moreover, taxpayers have a 30-day window within which the ITR form can be verified and ensured that all mandatory forms are provided with correct information. In case of false or incorrect information, you should redo the entire tax filing process. So ensure you have all bank statements, investment proofs, and rent receipts for all deductions.
File Taxes Compliantly with Skuad
Filing taxes can be a chore if you’re not well-versed in correctly calculating earnings, taxes, and deductions and filling out the tax forms. But don’t worry; by joining hands with Skuad, a global employer of record (EOR) platform, you can experience a seamless and simplified tax filing process.
Once you’re partner with us, you can enjoy seamless global payroll management, a hassle-free onboarding process, automated payments and tax complaint system.
Whether for cross-border, full-time employees, or contractors, Skuad can generate pay stubs and invoices and file returns tax-compliantly.
FAQs
Can I File Taxes Without a W-2?
Yes, you can file taxes without a W2 form. However, in that case, you must fill out form 4852 on the IRS website.
What if I Made a Mistake on My Return?
You can amend the tax return using Form 1040-X available on the IRS website.
How Long Should I Keep My Pay Stubs?
Ideally, it is recommended to retain your pay stubs for at least 12 months until you file your taxes.
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Nathan Williams is a Global Payroll Specialist and Finance Consultant. With a background in banking and finance, he is passionate about modern tech practices in payroll management and using global payroll platforms for global payments.
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