Practical and Helpful Tips: Tips
The W-2 form shows the total amount of taxes deducted from your earnings for the year and is employed to report your federal and states charges. Form W-2 is used by the employers to report the wages and salary of their workers for the year as required by the IRS. Note that W-2 also serves to report your country, government and other taxes which are deducted from your salary. When making your tax return; you need to have the data from your W-2 form. It is imperative to understand that when you are preparing your tax return, you will need to have all the information from your W-2 form. The IRS has it that each employer must present to their workers the W-2 form before January 31 after the close of the tax year which is mainly on December 31 thus avoiding lateness. Note that you should only get a W-2 form if you are an employee. W-2 form is portioned into boxes with each one of them representing various subjects related to your salary.
Box 1 depicts the annual wage and income payments while the box 2 outlines the federal tax deducted from your yearly earnings. Box 3, on the other hand, will record an amount lower than your annual salary which is resulted by the fact that only a portion of your income is subject to Social Security tax. It is essential to know that the rest of the boxes reports the income which is subject to Social Security tax which is deducted and details about your state’s income tax where applicable. When your boss withholds amounts from your payment as salary for federal income taxes, those amounts are forwarded to the IRS throughout the year. It is the responsibility of each employee to make regular payments throughout the year, but the employer who manages the process lifts the burden. It is essential to learn that when you prepare your federal tax return and make the summation of your tax throughout the year, the deducted amounts your employer reports must be subtracted from your tax payments.
Making the summations are vital in that it will help you to determine whether you need to ask for a refund or additional payments. The same summations are useful when you are handling the state tax return for the amount needed to pay your state income taxes. The recognizing information section of the W-2 form is a critical monitoring feature. When the salary you record on your taxes fails to match the information on your W-2, the IRS will demand to know the reason. Note that IRS also compare the recorded payment to that of your employer’s business tax return for accuracy. Note that when IRS gets your W-2 form, it will tell whether you owe tax and contact you when you fail to file return.