Also known as the “Wage and Tax Statement,” W-2 Forms are an integral part of tax preparation. Your W-2 shows the amount of taxes withheld from your paycheck in a given year. Whether you’re getting a W-2 for the first time or could use a refresher on the form, keep reading to learn more.
W-2 Wages and Withholding
Be aware that you should only receive a W-2 Form if you are an employee. Should you be self-employed or an independent contractor, expect to receive an earnings statement on a 1099 Form instead. For the sake of this post, let’s focus on a W-2 Form. For one, it’s divided into boxes that report numerous items related to your income. When you first receive a year’s W-2, take a close look at box 1. This is where you will find your annual wage and salary payments with the amount of federal tax withheld from it in box 2.
It’s important to know that since only a fraction of your income is subject to Social Security tax, you may find that box 3 report an amount that’s less than the year’s total wages. Wages subject to Medicare and Social Security taxes can also be found in boxes on the form.
What’s Important About Your Tax Withholding?
Take a close look at your next paycheck. When an employer withholds amounts from your paycheck for federal income taxes, those amounts are remitted to the Internal Revenue Service throughout the year. In turn, the amount your employer reports on the W-2 must be subtracted from your tax bill when you prepare a federal return. It’s at this point when you know whether to expect a refund or make an additional tax payment.
Verifying Your Identity
The IRS expects the income you report on your taxes to match the information on your W-2. If it doesn’t, they will want to know why. What a lot of folks fail to realize is that since the IRS gets a copy of your W-2, it already knows if you owe tax and will likely contact you if you fail to file a return. So don’t stand pat if the name or Social Security number on your W-2 is inaccurate. Report the mistake to your employer as quickly as possible so they can resolve in time for filing.
Common Questions About W-2 Forms
Now that you have some additional background information on W-2 Forms, let’s get into some frequently asked questions.
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Who needs to file it? – Any employer engaged in a trade or business that pays remunerations for services performed by an employee must file a W-2.
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When is it filed? – An employer must file a W-2 if they paid remuneration, including non-cash payments of at least $600 or they withheld any income, Social Security, or Medicare tax.
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What’s the deadline? – The deadline to file your W-2 is the end of February if filing on paper. You have a bit more time if e-filing, however, as the deadline is toward the end of March. Employers should know that they have a January deadline to provide employees with their copies.
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What’s the penalty for not filing a W-2? – If a business fails to file a W-2, they can expect heavy penalties to be handed down from the IRS. There’s also a penalty should you not provide recipient copies. As with 1099 Forms, penalties only increase with time. That’s why it’s imperative to file as soon as possible.
How OnlineFileTaxes.Com Can Help
Whether you’re a business owner or independent contractor, you don’t have time to mess around with tax forms. That’s where online e-filing comes into play. OnlineFileTaxes.com allows you to send those necessary forms to the IRS for fast, efficient, and simple filing. For years, we have been utilized by small business owners, CPAs, accounting professionals, and individuals. Our team is proud to offer a variety of filing options for your convenience.
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Whether you want to e-file W-2 forms or start on 1095 filing, we can help. Here are some other online tax forms you can expect to find on our site:
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