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The Reasons Behind the 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. An advantage that it comes with tax-related forms is that there’s no need for you 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 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. 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 receiving your W-2 form that the employer requires you to send, you will usually get multiple copies of it. This actually is done so you could keep one of the records and you also could include a copy with the federal tax return and your state, city 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. If you ever have your name misspelled or perhaps your Social Security number is wrong, the IRS will have issues when it comes to matching the records with what you have earned and paid as well with what you report to 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 would not be the case because employees actually needs to make regular tax payments through the entire year. This would be what’s going on when the employer withholds the taxes from the paychecks. They actually are withheld and then will be sent to the IRS.

When preparing your taxes, your W-2 will summarize how much had been withheld to Social Security, Medicare and on income taxes. If you will calculate on the total tax due well for the year, you actually could easily deduct how much you paid already for the IRS and owing a little more with the taxes or get a refund for over-payments if there are any.

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