The tax season isn’t too far now, and it is time to get your forms ready. But before you do that, it helps to have an idea of the type of forms you need to use and how to fill them. If you are an employee, you will have to use a W-2 tax form.
It shows details about the income you have earned from the employer and the amount of taxes that the employer withheld from your paycheck as well as the benefits provided for the year. This form should be used to file the State and Federal taxes.
An employer who is running a business or trade and who pays salary which includes non-cash payments of $600 or more for a year for the services of an employee is required to file the form W-2. This form should be filed for each employee from whom the Income tax, Medicare tax, or social security tax was withheld.
Using W2 forms
Different income tax forms serve different purposes, and the IRS requires employers to provide details of the salary and wages of employees through Form W-2. It also helps provide details about the taxes that are withheld from their paycheck in addition to other employer fringe benefits including adoption, health insurance, health savings account contribution, dependent care assistance and more.
For an employee, the information on W-2 is crucial to prepare the tax return. In short, if you have worked as an employee in a year, it is important to receive the W-2 near the start of the following year.
When to fill W2 form?
The W-2 should be sent by January 31st to the employees so that they can use it to prepare the tax return. As an employer, you have to file W-2 forms with the IRS and Social Security Administration by January 31st.
If you have not received the W-2 by early February, you need to contact the employer. They will be able to provide a digital version for use until you receive the W-2 in mail.
You can consider using the pre-printed forms to make the tax return preparation and filing process much simpler. You can make the process smooth and less stressful by ensuring that you have the form by the end of January. Next, verify your identifying information and then attach a copy of W-2 to your tax return. If you e-file, then your W-2 details will be sent with your tax return electronically.
What to do if there is a problem with your W-2
It is possible that there could be an error in your W-2 and if you notice it on the form, you need to let your employer know about it and ask for a corrected form. It could be a major error like a wrong social security number or something minor like a spelling mistake in your surname. It is important to get the error corrected at the earliest.
Right way to use W-2
Form W-2 is simple to use. It will be completed by the employer and will have all the information you require to complete your tax return. This means it will have the details about your total wages for the year as well as the state and federal taxes withheld from the payment. In addition to that, it will have details about the tips, premiums paid by your employer for a health coverage, the contributions to 401(k) and the contributions made to a health savings account.
The bottom line
Whenever the employer withholds an amount from your paycheck for income tax, it will be remitted to the IRS throughout the year so when you prepare your tax return, the employer will report the amount subtracted from your tax bill.
Filing your income tax return on time is crucial and if you delay the process, you could end up paying a hefty penalty over and above the tax amount.