Whatever is the kind of business you have, those tax forms are really a part of the job, particularly on January and April. So many people would often confuse those tax forms W-4 and W-2 because they are somewhat related and they also have similar names. One is used for reporting the tax situation of an employee. It is often a common mistake in the payroll to have such incorrect reporting on the holding of the W-4. It is very important that you really know the differences of the two forms.
The IRS or the Internal Revenue Service must know what income the individuals are earning during the tax year. The employees must also have money withheld for the paychecks of workers to cover for such end-of-year tax bill. The W4 and also the W2 forms are applicable to employees except for independent contractors. The independent contractors would have to file their taxes in a different manner.
An important thing that you have to know is that the W-4 form is a tax form which the employer asks their employees to fill up upon hiring. The employee should fill out that W-4 form unless they are making less than 800 dollars each year. Employers will be using such to compute for such federal income tax that should be reduced from the earnings of the employee. It is necessary for the employee to fill this out based on the household earnings.
There can be various things that make up the total number of withholding options called allowance for the withholding taxes. The things to take into consideration would include the number of dependents or children, the marital status as well as the employment status. An employee can actually update the W4 when one has changes in the financial status. Also, the employers are not actually asked to request for updates. If the employee is not quite sure on how much to pay the employer must withhold, then one can use the IRS online withholding calculator.
You must also know that the W-2 form is actually a tax form that the employers are going to issue to their workers on the end of each year. Such W-2 form is going to include the total amount of salaries which are earned by the employee. Also, this is going to list the total amount of the federal as well as state taxes withheld by the government. This also lists the contributions which were made to the Social Security during that tax year.
After you have the W2 form from your employer, you must submit the info in April when paying taxes along with the form 1040. It is annually that the employers should provide the W2 form to their employees by January 31. They must also send a copy to the Social Security Administration in February 29.