W-2 forms are considered to be an essential part for your tax preparation process because it reports wages paid and also taxes that are withheld by employers through the course of a year. One of the best advantage of it compared to other tax-related forms would be on the fact that there’s no need for you to fill out a W-2 form. You could actually just receive it and use it.
One of the things which you should know is that you are actually not the only one that the employer prepares the W-2 form. The Social Security Administration, you as well as the IRS will actually acquire a copy of it, which would be unwise if you are planning to under-report your wage or when you over-report your taxes withheld. You also need to be aware that you would expect a W2 form when you are an employee and also earned a certain amount or perhaps more or when you have any amount withheld. When you are earning money as an independent contractor, you could in fact expect a 1099 form compared to a W-2 from an employer as long you made more than their specified or particular amount.
If you receive a W-2 form which the employer need you to send by the end of January, you will then get multiple copies of it. This is so you can keep one as your record and include a copy on your federal tax return and your local, state or local tax returns.
It’s essential that you will review your W-2 form so you could ensure that the information is correct. In case your name is misspelled or your Social Security number is wrong or when this is missing, the IRS will be having problems on matching up the records on what you earned and paid on what you are reporting. This will be able to delay the processing of your return and to also trigger an audit.
The Reasons for its Importance
You actually are aware that those that are self-employed should make estimated tax payments throughout the year as well as assume that unlike it, there’s really no need to pay your taxes until April 15. However, this is not the case. This actually is the reason as to why employees makes regular tax payments throughout the year. This actually is what happens if the employer withholds taxes from your paycheck. They are in fact withheld and is then sent to the IRS.
This in fact is the reason as to why you should take care and understand your W-2 form because it will help you know if you are going to get a tax refund check on that year as well as on how big it’s going to be.