Whether you just started doing your taxes, or you’ve been handling them for decades, it’s always something that we try to put on the backburner.
The process becomes a little simpler, though, if you have a little understanding of what forms you’re looking at and how they fit into your tax situation. The most common form that any employee is responsible for is the W-2 tax form.
We’re going to take a brief look into W-2s today, giving you a little insight into how they work and what you need them for.
Let’s begin:
What is a W-2 Tax Form?
Any time you’re employed and receiving wages from an employer, you can expect to receive a W-2 around tax time.
These are documents, also known as Wage and Tax Statements, that employers are mandated to send you and the IRS. So, you receive one copy, and the IRS receives the other. These forms give the bare bones of your earning, detailing things like total income and taxes withheld.
You’ll notice that you get a number for your state and federal taxes withheld in addition to the gross earnings you received from that company for the year. You should expect to receive your form before the end of January of the following year.
In fact, employers are required to send W-2s out by this time so that employees have enough time to comfortably finish their taxes before April 15th.
Sections of the Form
The form, in addition to your gross earnings as well as taxes withheld, displays a number of factors in your yearly income.
Primarily, you’ll see your employer’s identification number, address, name, and zip code. You’ll also see things like tips, medicare withheld, social security withheld, and different benefits that you might have.
Those boxes are located on the upper three-quarters of the form, while some of your totals will be located at the bottom. Don’t worry too much if there are boxes missing on the form, as most people don’t have situations that warrant information in each one.
What matters the most is that the information is accurate to your knowledge and that you can see your wages, federal income withheld, and state income withheld.
Employers and Self-Employed Individuals
If you’re an employer and don’t have knowledge about how to start creating W-2s for your employees, you can find it here. It’s important for you to understand how to document employee wages and turn them in to the IRS on time.
If you’re self-employed, you don’t need to worry about W-2s. Freelancers and contractors who are self-employed but work for clients have another form to think about.
Clients who pay you more than $600 dollars in a given year are required to file 1099s for you. This is a form that details the income you make as a self-employed person.
Need More Tax Help?
Understanding W-2 tax forms is relatively simple. The tricky stuff comes when you get into more complicated financial situations with property, investments, tax brackets, and more. We’re here to help.
Explore our site for more insight into ways that you can get your taxes done without the usual stress and headaches.
