Importance of the W-2 Form
W-2 forms are actually essential part when it comes to the tax preparation of people when they report the wages that are paid and taxes that are withheld by an employer in a year. One considered advantage with tax-related forms is that there’s entirely no need to fill out a W-2 form. You just simply receive it and then 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 Social Security Administration, IRS and you as well will acquire a copy that makes it unwise for you to think of under-reporting your wage or perhaps trying to over-report your tax. It’s very crucial that you know that you would expect a W2 form when you are an employee and you have obtained a certain amount or perhaps had any amount withheld. When you are earning as an independent contractor, you will get the 1099 form than the W-2 from the employer as long as you are making more than the requirement.
After receiving your W-2 form that the employer requires you to send, you will usually get multiple copies of it. 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. If you are not able to get your W-2 on time, the IRS comes with guidelines on what you should 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. If in case your name is misspelled or your Social Security number is wrong, the IRS will have problems when it comes to matching the records that you have provided on what you have paid and earned and what you have reported to them. This will be able to delay the process of return as well as trigger an audit.
You may be aware on some cases that people who are self-employed needs to make an estimated tax payment for the entire year and assume that there’s need to pay the 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 will be sent to the IRS.
If you will prepare your taxes ahead of time, the W-2 will summarize how much had been withheld for the income taxes, Medicare and also for the Social Security. When you calculate on your total tax due for the year, you actually will be able to deduct on how much you paid already for the IRS and owing a little more on taxes or due a refund when there are over-payments.