The W-2 form shows the total amount of taxes deducted from your earnings for the year and is employed to report your federal and states charges. 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. Your W-2 form also indicates the amount of state, federal and other taxes which are withheld from your salary. It is imperative to understand that the data on your W-2 is vital when you are preparing tax return. The IRS has it that each employer must present to their workers the W-2 form before January 31 after the close of the tax year which is mainly on December 31 thus avoiding lateness. Note that you should only get a W-2 form if you are an employee. The W-2 form is divided into portions with each part showing a particular article linked 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. The remaining boxes on W-2 form shows earnings subject to Medicare tax, Social security tax that is withdrawn and information about your country income tax withholding if necessary. It is imperative to understand that when an employer deducts specific amounts from their employee’s salary for government income taxes, they are required to submit them 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. It is essential to learn that when you prepare your federal tax return and make the summation of your tax throughout the year, the deducted amounts your employer reports must be subtracted from your tax payments.
When you carry out the calculations, you will realize whether you will be refunded or add more amounts. When you report a state tax return, similar calculations are necessary for the amounts withheld to pay your state income taxes. The recognizing information section of the W-2 form is a critical monitoring feature. 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. It is prudent to know that IRS analyzes your W-2 form and check whether you have paid the taxes or not and the call you if you fail to file the tax returns.
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