A W-2 form depicts the amount of taxes withheld from your salary for the year and is applied to record your federal and states fees. Form W-2 is used by the employers to report the wages and salary of their workers for the year as required by the IRS. You need to realize that your Form W-2 also shows the amount of government, county, and other taxes that are withheld from your income. It is imperative to understand that the data on your W-2 is vital when you are preparing tax return. The IRS eliminate the issues of delay by having all the employers to hand over the W-2 firm to their employees before January 31. W-2 Form is used by individuals who are employed. W-2 form is portioned into boxes with each one of them representing various subjects related to your salary.
In box 1 of the W-2 form, you will find your annual wage and salary payments with the federal tax withheld from it in box 2. Since it is only a part of your salary which is subject to the social security tax, you will get that box 3 reports an amount which is less than your entire wage for the year. Other boxes which are on W-2 form outlines the payments subject to social security taxes and Medicare tax which are withheld and details on your state income tax withholding, if applicable. Note that the amount withheld by your employer from your pay for federal income taxes are remitted to the IRS throughout the year. IRS require that every worker to make payment throughout the year which is a tedious task but the employer steps in to take care of it. When you prepare your federal return and calculate your tax for the year, the withholding amounts your boss reports on the W-2 must be deducted from your tax payments.
When you carry out the calculations, you will realize whether you will be refunded or add more amounts. When you record a state tax return, same calculations are required for the amount deducted to clear your state income taxes. It is imperative to know that the identifying part of the W-2 form is a useful tracking component. You will be required to present a reason to IRS when the salary you indicate on your taxes is not similar to the one on the W-2 form. Note that IRS also compare the recorded payment to that of your employer’s business tax return for accuracy. Note that when IRS gets your W-2 form, it will tell whether you owe tax and contact you when you fail to file return.