You probably know that Forms W-2 and W-4 are related to income taxes. And chances are you’ve filled out a W-4 form at least once and have received a W-2 form from your employer every year. But do you really understand the purpose each form serves?
Simply put, your employer uses the W-2 form to report to you and the IRS both the wages you earned and the taxes that were withheld during the year. You need to submit this form, along with your tax return, when it’s time to file and pay your taxes. The W-2 form also reports other data, including information on dependent care benefits, retirement plan contributions, and other employee benefit information.
Your employer is required to fill out the W-2 form and give it to you no later than January 31 following the end of each tax year. You should expect to receive three copies of the completed W-2 form from your employer to use for your records as well as federal and state tax filing purposes. Your employer will also send a copy to the Social Security Administration by the end of February annually.
The W-4 form is used to determine the amount of income tax that your employer should withhold from your regular pay. Typically, you complete this form when you start work with a new employer. You will also want to fill out a new W-4 when your personal or financial situation changes to ensure that the proper amount of income tax is withheld from your paycheck.
You can learn more about these tax forms by visiting irs.gov.
If you have questions, contact the experts at Henssler Financial: