Source: marca.com

Understanding Wage and Tax Statements or W-2 Tax Filing

Wage and Tax Statement or Form W-2 is a document that employers in the USA need to send to every employee and the IRS (Internal Revenue Service) at the end of every year. The W-2 form includes the yearly wages and the amount of taxes withheld from paychecks and reports them to the IRS. It is an important tax document that is mandatory for employees of all companies and organizations in the country to send to their employees or workers. Furthermore, it is also essential to maintain W-2 deadline filing to avoid penalties and other fines.

Filing for Wage and Tax Statement

If one is an employee of an organization, he/she will automatically receive a W-2 for income taxes every year. The concerned employer will also submit copies of his/her employees’ W-2 forms to the Internal Revenue Service (IRS). When one prepares his/her income taxes, he/she must include relevant data found on the W-2 into a Form 1040 individual tax return, either electronically or manually. The presence of online tax preparation software enables people to directly import relevant data and information on their W-2 from their employer, or payroll provider, in several instances.

Who files the Wage and Tax Statement?

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An employer is legally entitled to send out W-2 forms to all the employees in his/her firm. It includes employees who have been paid a regular salary, wage, or any other kind of compensation. One has to understand that W-2 forms are not meant for self-employed and contract-based employees, as they file taxes with different tax forms. Employers must send the W-2 forms to their employees on or before January 31st of every year. This is more so that employees get adequate time to file taxes before the w-2 deadline, which is dated April 15th of every year.

What information is included in the W-2?

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Irrespective of whether the employer is a small, mid-level, or giant organization, the W-2 form has the same fields and columns. The form is categorized into federal and state sections. This is done because the employees of organizations have to file taxes on both the federal and state levels. Some fields include information about the employer, like the EIN (Employer Identification Number), which is on the federal level, along with the state employer ID number. The majority of the remaining columns need to be filled with the employee’s income from last year.

Including correct information

The total earnings of the employee from an employer are recorded. Additionally, the record includes the amount withheld in taxes from the paycheck that is categorized into federal income tax, social security tax, and others. When an individual has multiple jobs, he/she has to provide inputs and data separately in W-2 forms. Employees need to provide the correct data and figures to avoid an audit of the taxpayer by the IRS.

Conclusion

W-2 forms are either sent via mail in the form of a hard copy or online. In the majority of years, the W-2 deadline is January 15th, or at most at the end of February. If the employee fails to file the tax, he or she will be penalized based on his or her income and the amount of tax owed.

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