Tax season is just around the corner! If you pass off your taxes to your tax preparer, whoever it may be, then you may not be aware of all the information your W-2 holds. Since this information pertains entirely to you, we encourage you to become familiar with the basics. Grab an old W-2 from past years (yes, you need to save these) to use as a reference. It may look intimidating, but everything is broken down very particularly and you’ll have a basic understanding of it by the time you’re finished.
What Is A W-2?
A W-2, also known as a Wage and Tax Statement or Personal Income Tax, is a form from the Internal Revenue Service (IRS) that reports each employee’s wages and the taxes withheld throughout the year. Every employer must fill out a W-2 form for each employee they paid throughout the year. Your taxes cannot be completed without a legitimate W-2 form.
You have until mid-April to complete your W-2. This will determine if you owe the government personal income tax or if you will get money back. Shoving your W-2 aside is not a rational or ideal solution. The IRS will be contacting you if they don’t receive anything.
What Is On A W-2?
Your W-2 contains all of your confidential personal information, like your social security number, address, and legal name. It also shows how much your made in the year, taxes withheld, Social Security tax applied and withheld, Medicare tax applied and withheld, and any other tips or compensation that was recorded. Your W-2 further dives into these numbers and lays it all out for you.
There is also other information that may or may not apply to you, including the amount of dependent care benefits your employer paid for you or you've incurred, any money distributed to you from your employer’s deferred compensation plan, and the taxes withheld from all of the above.
When Should Employees Expect Their W-2?
Beginning the new year, keep your eye out for an electronic or paper copy of your W-2. Businesses must send them out by January 31. If you are employed by multiple companies, you will receive one for each job you have.
If there is an issue with your W-2 like your name spelled incorrectly or a decimal point or comma very obviously in the wrong place, show your employer the errors and request a new W-2 before you move forward with filing.
Who Will See My W-2?
Your employer legally needs to mail you, the IRS, and the Social Security Administration a copy of your W-2, and you will give a copy to your tax preparer. Aside from that, you should keep your sensitive information out of sight, stored somewhere for safekeeping.
What's The Difference Between A W-2 And W-4?
They’re both tax forms, but for different purposes. Your W-2 reports your income and the taxes withheld from you during the year, whereas a W-4 is a form you fill out to tell your employer how much tax to withhold from your checks every period.
Want More Information?
If you’d like more information or help on understanding your W-2 or other tax forms, speak with your tax preparer. If you’re unhappy with your current tax preparer, it may be time to reach out to a new trusted expert. Reference our blog on your search for a new tax preparer, or contact Skynar Bookkeeping for our favorite tax preparers!