For many people, getting a W-2 form in late January or early February is the first step to paying taxes.
An employer's W-2 income statement is an essential document for declaring income. It is a picture of the amount that an employer-paid you during the year, the amount of tax you withheld from your wages, and other deductions from wages that may affect your tax liability.
At the first glance, this may seem like a complicated form of the IRS system made up of tables, codes, and numbers. But a W-2 form is not as difficult to understand as it seems. Whether this is your first W-2 or you want to try the taxes for the first time or both, it is essential to know how to read the form and what to do with the information it contains.
And it is essential to note that if you have other types of income, such as a single income, the information on this income must be declared on other IRS forms and not on W-2.
IRS Form W-2, "The Wages and Taxes Report," reports an employee's earnings from the previous year, the amount of taxes withheld by the employer for that income, and other information. Employers must submit a W-2 form to employees in January, as well as send a copy to the IRS. Employees use Form W-2 to prepare tax returns.
The basis of the W-2 form
• The IRS asks employers to report wages and salary information. Employers do this using Form W-2.
• Do not confuse a W-2 with a W-4: this is the form you use to tell your employer the amount of the deduction at source on your paycheck for each payment period. The keyword here is "employer."
• or contract workers receive 1099 from clients, not W-2
• Employers must submit a W-2 form to employees at the end of January each year.
• Any employer who paid at least $ 600 during the year must submit a W-2 form. The suggestion could be on it.
• For anyone, the information in your W-2 determines whether they will receive a refund or issue a check in April.
Each section of W-2 contains important information about your taxes. Here is a guide to the structure of copy B, which will be sent with the federal income tax return and the meaning of each section.
• Box A: your social security number, used by the IRS to identify you.
• Box B: the employer identification number or EIN, which the IRS uses to identify the employer.
• Box C: Name, address, and postal code of the employer.
• Box D: An employer can choose to include a code in this section to identify their form. It can be left blank.
• Box E: Your legal name.
• Box F: Your address and postal code.
• Box 1: The total amount of taxable salary, mentioned in the canceled income and other taxable allowances that the employer paid you in the last fiscal year, but does not include money that differs from your payment for qualified services plan 401 (k) or IRA.
• Box 2: The amount of federal income tax that the employer withheld from wages during the year.
• Box 3: Total wages paid subject to social security tax. Because some income may be subject to social security tax, but not to income tax, do not worry if Table 1 is exceeded.
• Box 4: Social security tax withheld from wages and tips communicated to the employer. For 2019, the maximum amount of salary for which social security tax can be deducted is $ 132,900; this amount is called the social insurance salary ceiling. This means that you do not have to pay payroll taxes for wages above this amount. The social insurance tax rate is 6.2% for employees (the employer pays an additional 6.2% of their salary; therefore, the amount in this table should not exceed $ 8,239.80 (the calculation for this figure is $ 132,900 x 0.062).
• Table 5: Total salary and recommendations communicated to the employer, who are subject to Medicare tax. Unlike social insurance tax, there is no salary limit for Medicare tax. This means that this number may be higher than that in Table 1 or Table 3.
• Box 6: The amount of Medicare tax deducted during the year. There is no base salary cap for Medicare; therefore, the Medicare tax rate of 2.9% - 1.45% of employees and 1.45% of employees – applies to all earnings.
• Box 7: the advice you gave to the employer. If this box is empty, you will not receive suggestions regarding your work, or you may have undeclared suggestions that you will need to make when filing your taxes.
• Box 8: If you work in a large restaurant that collects tips from all employees, this is the place where your employer informs you of the advice given to you. These are considered taxable income.
• Table 9: A verification code if the employer participates in an IRS pilot program. It can be left vacant if the employer does not participate.
• Box 10: The number of services you have chosen, if applicable. For example, if the pre-tax money was deferred under a flexible spending contract to pay for employee care expenses or if the employer-provided money for employee care expenses in a program employee health care costs, the amount will be displayed.
• Table 11: The amount that an employer-paid you for an unreserved deferred compensation plan. The purpose of item 11 is to enable the social security administration to determine whether part of the amount referred to in box one or boxes 3 and 5 was earned in the previous year, to be able to check that the correct amount has been paid as compensation.
• Box 12: A summary of the codes that the employer must communicate to the IRS. There are many items that the employer must report in this section, such as non-taxable sickness benefits, reimbursement of moving expenses of members of the military, or adoption benefits provided by the employer.
• Table 13: three checkboxes indicating the following:
• The legal status of employee: Your earnings are subject to social security and Medicare taxes, but are not subject to federal income tax withheld.
• Retirement plan: you participated actively in a retirement plan such as 401 (k) during the last financial year.
• Third-party sickness benefit: you have received an illness from an external insurer.
• Box 14: field in which the employer declares everything outside a different area of the form. This may include non-taxable income, uniform payments, and health insurance premiums.
• Boxes 15-20: State and local tax information on income reported by the employer. However, just because state information is included in this copy of W-2, remember that you must attach copy 1 to any state, city, or local declaration you must submit.
Your information on W-2 is not secret
• Employers have a legal obligation to send copies of W-2 to the social security administration and the IRS ("copy A") and national and local tax authorities ("copy 1").
• You will not simply avoid storing W-2 in a drawer and deciding not to include tax return information. You may receive a short letter and a few months of headaches from the IRS and the state, if your state has an income tax, after comparing the return with the information your employer sends to the government. . .
An employer must submit W-2 form by the end of January
The IRS requires employers to provide W-2 to government and employees before January 31 or impose sanctions. The IRS generally defines the offer as "receive it by mail," which means that you must have it on hand before the first week of February.
• Employers can also send W-2 forms electronically to employees, but this is not mandatory.
• Even if you left your job months ago, your former employer could wait until January 31 to submit a W-2 form, unless you request it in advance. In such a case, the employer has 30 days to provide it.
Your employer may make a mistake.
If the employer omits a decimal point, input a wrong name or an incorrect dollar amount, or checks the wrong box, do not fret, rather requests a correct W-2.
Reporting the error and waiting for a new W-2 will take time, but it can make you feel better: the IRS can fine your employer if the error involves a dollar amount or "something important" to you.
The correct address is significant
• If W-2 does not appear on Valentine's Day, ask your employer for a copy first and make sure you have the correct address.
• If that doesn't solve the problem, call the IRS. You must provide information about when you worked and a payment estimate.
• Remember that the tax return was not yet filed in April; therefore, it may be necessary to estimate earnings and retention to do so on time. The IRS may also delay processing the return.
• If the W-2 finally appears after you have already filed your tax return, you may have to return and modify your tax return.
