Why are W-2 Forms Important?
W-2 forms are considered to be crucial parts for tax preparation of people when they report on the wages that are being paid and the taxes that are withheld by the employer. One considered advantage with tax-related forms is that there’s entirely no need to fill out a W-2 form. You simply will just need to receive it and to use it.
An essential thing that you should know first is that you will not be the only one who the employer will prepare a W-2. The IRS, Social Security Administration and you will be able to get a copy, which makes it unwise of thinking about under-reporting your wage or perhaps to over-report your tax. You should also know that you would expect a W-2 form when you are an employee and you also have earned a certain amount or had any amount withheld. If you earn money by being an independent contractor, you will get the form of 1099 instead than receiving a W-2 from the employer as long as you are able to make more than the certain amount requirement.
After you have received your W-2 form which the employer needs you to send, you will mostly get multiple copies. This is done in order for you to keep one of the records and to be able to include a copy with your federal tax return as well as your city, state and local tax returns. In case that you have not obtained your W-2 on time, the IRS comes with certain guidelines regarding the things that you can do.
You should also make sure to do reviews on your W-2 form for you to get guarantees that any information provided is correct. In case your name is misspelled or the Social Security number provided is wrong, the IRS will have problems on matching the records which you paid and earned and to what you report them. This will be able to delay the process of return as well as trigger an audit.
You may be aware that people who are self-employed usually needs to make an estimated tax payment for the whole year and you may assume that you don’t need to pay your taxes. This actually is not the case because employees need to make their regular tax payments for the entire year. This actually is what’s going on if the employer will withhold the taxes coming from the paychecks. They actually are withheld and then will be sent to the IRS.
If you prepare your taxes, your W-2 summarizes on how much had been withheld to income taxes, Social Security as well as on Medicare. If you calculate on the total tax due for the year, you will be able to subtract how much you have paid already for the IRS and owing a little more in taxes or due a refund for overpayment.
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