would you like to record your paycheck in a way that helps estimate your federal income
taxes well then you should learn the difference between deductible and non-deductible w-2 items
if you have any questions about this topic you can leave them in the comments section below and i'll
do my best to help you and of course if you feel the video helped you i hope you will click like
and don't forget to subscribe to get updates on new videos that come out all the time
everyone has different circumstances that determine which items on their w-2 will be taxable
or non-taxable some people itemize and therefore deduct state and health insurance and some do not
federal income tax social security and medicare are never deductible
let's assume all the other w-2 items are deductible from your federal taxes and let's
change all three deposits for the salary that we recorded if you remember you can click reports
custom reports profit and loss and you see we have salary income that we recorded in a prior video
you can double click and see all three of the deposits that we made
when we deposited our monthly check from salary and if we scroll to the right we
can see the amounts and the running and changing balance as we recorded them
now if i double click the earliest one anywhere in the row anywhere on that line i double click
and here we are in the window that we used to originally record this paycheck
salary and income is included in your income tax so we click here we click the pull down and we
click non-exempt because salary is not exempt from income tax federal tax is non-deductible
so we will click non-deductible class because you cannot deduct your federal income tax from
your federal income tax now let's just say that this person is itemizing so we will deduct state
income tax it is deductible and social security never deductible medicare never deductible
and let's just imagine that health insurance
is deductible so now they're all in their appropriate class and we click save and close
now what i'm going to ask you to do is to change the other two without me because i think it would
just be redundant video and repetition if i show you how to change the other two
so i'm going to pause the video while i change the other two in the way that you just saw and
i'd like you to do the same then after the video was paused we will check the results together
and here we are after i finish changing them so let's click reports profit and loss by class
and you can see the most important column is this column non-exempt income and deductible expenses
here's your taxable gross income here are your deductible expenses
and this this and even this right now is a reflection of your
estimated tax for the quarter so if you have other side businesses
where you're not paying estimated tax and you don't have money withheld
you will know approximately how much to send in every quarter by looking at this column
it's not perfect but it's the closest you can get during the tax year
you