Form W-2

Working For The Man

What is a form W-2 form?

The “Wage and Tax Statement,” also called Form W-2, is an IRS tax form used by employers to report:

  • Wages paid to employees
  • Taxes withheld from employees

At the end of the year, the W-2 is sent to both the IRS and the employee. The employee receives three copies of Form W-2 for their:

  • Own records
  • Federal tax return
  • State tax return

 

The employee uses this information to complete their individual tax return using Form 1040 (the standard federal income tax form used to report an individual’s gross income).

Components of the W-2 form

  • Name and mailing address
  • Social Security number
  • Employee Identification Number
  • Total taxable wages over the year
  • Amount of federal tax withheld
  • Amount of state/local tax withheld
  • Medicare and Social Security taxes withheld

Comparison

Form W-2 vs. Form W-4

Why is it important?

The W-2 is used when you file your own taxes. When the total amount of taxes to be paid is calculated, you subtract all taxes withheld from the total amount of taxes due to find out how much you owe. If you overpaid, you may be eligible for a refund.

Form W-2 Vs. Form W-4

Form W-2:

  • A form that employers give to their employees at the end of each year
  • Information from it is then used on Form 1040 to submit taxes in April
  • Also used to report payroll taxes to the Social Security Administration

Form W-4:

  • A form that must be completed whenever an employee starts a new job
  • Used to calculate the amount of federal income tax that should be withheld
  • Can be updated whenever necessary by the employee

Sample Form W-2


Calculator: How much will you have at retirement?


Need to know:

  • Employees must receive their W-2 forms no later than January for them to file their taxes in time.
  • The official form from the IRS must be used. W-2 forms printed at home will not scan properly in federal machines.
  • Forms are to be submitted to the IRS and Social Security Administration by February. The delay between sending them to employees and the IRS is to allow employees to check for accuracy on the forms.

References

  1. http://www.fool.com/personal-finance/taxes/2015/07/19/why-w-2-forms-are-important.aspx
  2. http://www.investopedia.com/terms/w/w2form.asp
  3. http://www.forbes.com/sites/kellyphillipserb/2015/03/16/understanding-your-forms-w-2-wage-tax-statement/#315c68e642fd
  4. https://www.aabacosmallbusiness.com/advisor/differences-between-w-2-w-120007115.html
  5. https://en.wikipedia.org/wiki/Form_W-2

You May Also Like