Regardless of the business which you are in, the tax forms are certainly a part of your job, particularly between the months of January and April. Many individuals usually confuse the tax forms W-2 and W-4 since they relate to one another and they also have the same names. This would be used for reporting the employee’s tax situation. It is often a common mistake in the payroll to have such incorrect reporting on the holding of the W-4. Well, it is best that you understand the difference of these two forms.
The IRS must be able to know the income which the people are able to get for the tax year. Moreover, it also requires to have money withheld for the employees’ paychecks to cover the end-of-year tax bill. The W4 and also the W2 forms are applicable to employees except for independent contractors. Those independent contractors actually file such taxes in a different manner.
Something to know about the W-4 form is that this is the tax form required by the employer upon hiring an individual. The employee should fill out that W-4 form unless they are making less than 800 dollars each year. Employers will be using such to compute for such federal income tax that should be reduced from the earnings of the employee. An employee must fill in based on the household earnings.
The different things actually make up that total number of the withholding options, known as allowances, for the withholding taxes. Things that must be considered would include the number of children or the number of dependents, the employment status and the marital status. The employee may update the W4 any time when there is a change in one’s financial status. Moreover, the employers aren’t asked to request updates. When the employee is not very sure about how much pay one wants the employer to withhold, then one may refer to the IRS online withholding calculator.
You must also know that the W-2 form is actually a tax form that the employers are going to issue to their workers on the end of each year. The W-2 form would include the total amount of the salaries earned by the employee. This reflects as well the amount of the state and also the federal taxes which the government has actually withheld. This also lists the contributions which were made to the Social Security during that tax year.
You will have to submit the information in April after getting the W2 form to pay your taxes and you also have to bring with you form 1040. It is necessary for the employers to provide their employees their W2 by January 31 annually. The SSA must also receive the same copy by February 29.