In order for taxpayers to file federal and state taxes, employers provide w2 forms online, also called the Wage and Tax Statement, to each employee and the Internal Revenue Service (IRS). This form details the amount of taxes deducted from an employee’s paycheck as well as the income obtained from the employer. An individual whose employer withholds taxes from their paychecks and reports this information to the government is known as a W-2 employee.
Form W-2: Who Files It?
Every employee who receives a salary, wage, or other type of remuneration from their company is required to get a W-2 form. Self-employed or contractual workers are not included in this as they use separate forms to file their taxes. In order for the employee to submit income taxes before the deadline, which is often April 15, the employer must provide the W-2 form to the employee by January 31 at the latest each year.
W-2 forms are used by employers to report withheld Federal Insurance Contributions Act (FICA) taxes. Employers are required to submit Form W-2 and Form W-3 to the Social Security Administration (SSA) by the end of January for each employee from the prior year. Each worker’s entitlement to Social Security payments is determined by the SSA using the data on these forms.
Details Presented on a W-2
Every year, employers send W-2s to employees for their income taxes. If a taxpayer works for more than one job, they will obtain numerous W-2s. A copy is also sent to the IRS. Either manually or electronically, taxpayers enter the information from the W-2 into a Form 1040 individual tax return. Every W-2 contains the same data, regardless of the employer or business:
Employees are required to submit taxes on both the state and federal levels.
Details about the employer, such as the state ID number and the federal Employer Identification Number (EIN) of the business.
money earned by the employee in the prior year.
There are several types of taxes that are deducted from employees’ paychecks, including Social Security and federal income taxes.
The employee received whatever tips they received during the year.
Associated Tax Records
When an employee first starts working for a firm, they fill out Form W-4. The data is used by the employer to calculate the amount of taxes that should be deducted from employees’ paychecks. Payroll, tax withholding, employer-sponsored perks, and pre-tax contributions to retirement plans such as a 401(k) are all tracked using the data on Form W-4 (or occasionally Form W-9).
An employee will receive a 1099 form that details their earnings and any deductions made if taxes are not withheld. This income must be disclosed by individuals on their yearly tax returns. By the end of January of the next year, this normally appears.
If a taxpayer obtained earnings from gambling during the previous year, a gaming establishment, such a casino, may submit Form W-2G, a tax form.6.After making interest payments on a federal student loan, students get a 1098-E statement. Additionally, students get a 1098-T statement detailing their college tuition costs, which may qualify them for tax credits or deductions.
How Can Workers Determine Whether Enough Tax Has Been Withheld Throughout the Year?
The amount of tax withheld as shown on the W-2 form is subtracted from the employee’s gross tax liability when they submit their taxes. A refund will be given if more tax was withheld than was due. Form W-2 is another tool the IRS employs to monitor an employee’s income and tax obligations. The IRS has the right to audit a taxpayer if the income shown on Form W-2 and the employee’s taxes differ. Even if they are not included on a W-2, taxpayers are still required to declare all salary, wage, and tip income.
What is the minimum income required to obtain a W-2?
If an individual makes at least $600 per year, their employer will often issue them a W-2. Independent contractors and contracted people are not regarded as workers and are given a 1099 rather than a W-2.
What Makes a W-2 Different from a W-4?
An employer can use a W-4 to find out an employee’s tax ID number (often SSN), marital status, number of dependents and allowances, and the amount of tax that should be withheld from each paycheck. When an employee is employed or if their filing status or withholding has to be changed, they fill out the W-4. At the conclusion of the tax year, employers complete the W-2 and provide it to employees for inclusion on their tax returns.
The Bottom Line
Every year, companies are required to submit Form W-2 to the IRS and their employees. The yearly salary of an employee and the taxes deducted are reported on the form. The form is also used annually by employees to file their taxes.