A W-2 form is a type of document which outlines the amount of tax withdrawn from your annual income and is used to report your federal and country’s taxes. It is a requirement by IRS that each employer to record their wage and income information for their workers on Form W-2. Your W-2 form also indicates the amount of state, federal and other taxes which are withheld from your salary. It is imperative to understand that the data on your W-2 is vital when you are preparing tax return. To make sure that you have in at the right time, the IRS requires your employer to submit to you a W-2 form before January 31 after the close of the tax year which is usually December 31. W-2 Form is used by individuals who are employed. The W-2 form is divided into portions with each part showing a particular article linked to your salary. To learn more, check What Happens If You Don’t File A W2 Statement?
Box 1 of W-2 form show the yearly income with the government tax withdrawn from it in box 2. 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. The remaining boxes on W-2 form shows earnings subject to Medicare tax, Social security tax that is withdrawn and information about your country income tax withholding if necessary. When your boss withholds amounts from your payment as salary for federal income taxes, those amounts are forwarded to the IRS throughout the year. The IRS needs every employee to make periodic payments throughout the year, but your employer handles this for you. 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. Check Why You Need To File A W2 Statement for more info.
After performing these calculations, you will know whether you will get a refund or make an extra payment. When you report a state tax return, similar calculations are necessary for the amounts withheld to pay your state income taxes. The recognizing data section of the W-2 is a crucial tracking element. You will be required to present a reason to IRS when the salary you indicate on your taxes is not similar to the one on the W-2 form. Note that IRS also compare the recorded payment to that of your employer’s business tax return for accuracy. It is prudent to know that IRS analyzes your W-2 form and check whether you have paid the taxes or not and the call you if you fail to file the tax returns. Check https://www.wikihow.com/Do-Your-Own-Taxes for other references.