A W-2 form is a vital part for people’s tax preparation because this will report wages being paid and taxes which are withheld by employers in a course of a year. A good advantage about it than other tax-related forms is that you don’t really need to fill out a W-2 form. You could actually just receive it and use it.
One thing that you have to know is that you are not the one that the employer prepares the W-2 form. The Social Security Administration, you as well as the IRS will actually acquire a copy of it, which would be unwise if you are planning to under-report your wage or when you over-report your taxes withheld. You should be aware that you can expect a W-2 form if you are actually an employee and likewise earned a particular amount or more or if you ever have an any amount you have withheld. If you earn money as an independent contractor, you will expect a 1099 form than the W-2 from an employer as long as you are making more than their specified amount.
If you will get a W-2 form which the employer needs you to send in January 31, you will actually acquire multiple copies of it. This is so you could keep one as your record and include a copy with the federal tax return and your local, city or your state tax return.
It is very important that you do reviews on your W-2 form in order to make sure that the information is correct. If ever your name is misspelled or that your Social Security number is wrong or is missing, the IRS is going to have troubles in matching up the records to what you have earned and paid on what you have reported. This will be able to delay the processing of your return and to also trigger an audit.
Why is it Important?
You actually are aware that those that are self-employed should make estimated tax payments throughout the year as well as assume that unlike it, there’s really no need to pay your taxes until April 15. But this is however not the case. This actually is the reason as to why employees makes regular tax payments throughout the year. This would be what really happens if the employer is going to withhold taxes from your paycheck. They are in fact withheld and is then sent to the IRS.
This in fact is the reason as to why you should take care and understand your W-2 form because it will help you know if you are going to get a tax refund check on that year as well as on how big it’s going to be.