Are you confused on what a W-4 form is? How about a W-2?
You’re not alone.
The truth is, most of us don’t look at these complicated IRS forms on a daily basis, so when we do, we’re pretty lost! However, it’s important to know the difference between a W-4 and W-2 as both impact how much tax is taken from your paycheck and how big your refund may be when you file your taxes.
When do I need to look at these IRS forms?
W-4: You’ll receive a blank W-4 when you start a new job. As a new employee, you’ll be required to fill out this form.
W-2: Each year, at the end of January, you’ll receive a W-2 from each of your employers. You’ll refer to this form when preparing your tax return.
How do these forms affect my tax situation?
W-4: Depending on how you fill it out, the W-4 will set the amount of taxes withheld from each of your hard-earned paychecks. This means that you will have more or less cash when you get paid depending on your W-4.
Claiming a higher amount of allowances on your W-4 will get you more cash each week. Claiming a lower amount will do just the opposite but will get you a bigger refund when you file.
To learn more on how to fill out a W-4 form, refer to “How to Fill Out a W-4 Form Correctly”.
You can update your W-4 form whenever necessary. You’ll want to do so when going through life changes, such as having a baby or getting divorced, for example.
W-2: The W-2 that you receive in the mail from your employer shows the total income that you earned throughout the year. It also includes how much tax was withheld from your income by the feds and by your state. If too much tax was taken, you’ll get a refund.
Who is responsible for filling out each form?
W-4: You’re responsible for filling out and updating your W-4 information- no one else should be doing so. Once you complete and sign it, your employer is responsible for keeping the form on file.
W-2: Your employer is responsible for completing your W-2 and then issuing you a copy to use for filing your taxes. If your employer fails to send you a W-2 form, you’ll need to take further action. To learn how, refer to our article, No W-2 Form? Missing a 1099? You May Still File!
Who will hold on to these forms?
W-4: Your W-4 will be tucked away in your payroll department’s filing cabinet.
W-2: You’ll be issued three copies of your W-2 form. You’ll file the first copy with your federal tax return. The second copy is to file with your state tax return. The third copy is for your personal records to keep with any prior year tax documents, old baseball cards, or those skinny jeans you keep starting new diets for.Tuesday, May 5th, 2015 at 9:58 am and is filed under Tax Forms | Blog.