In this blog, let us briefly look at the W-2 form, the W-2 form used, the W-4 Form, its purpose, and the differences between W-2 and W-4.
In short, IRS Form W-2 (Wage and tax statement) is also known as the W-2 form. Every employer has to send out a W-2 form to his\her employees. However, contracted or self-employed workers are not included in this they will have to file a separate form. Also, every employer must ensure that this W-2 form is sent to the employees on or before January 31 every year. The employees will have sufficient time to file their income tax details before the deadline of April 15 (the deadline date for filing income tax, most probably every year).
What is the Purpose of a W-2 Form?
This form provides details about the taxes an employer has withheld from an employee's wages. If an employee earns at least 600$ in a year, then he\she is eligible to fill out this W-2 form. This form provides a clear picture of the Employer Identification number, social security and Medicare taxes, Federal and state income tax and retirement contributions. This W-2 form info is needed for the IRS to know the amount of wages employees earn and the amount allotted for social security and Medicare taxes. Remember, the IRS imposes fines and penalties for W-2 errors and incorrect W-2 forms. So, ensure that the W-2 form info is filed correctly. Also, one may use the W-2c Form to correct the W-2 form error. When it comes to penalty for late filing of Form W-2, the IRS charges 50$ per W-2 form if it is filed within 30 days after 31ST January, whereas if it exceeds 30 days. Still, before August 1, the penalty would be 110$ per W-2 form. If the W-2 form is filed after August 1, then 270$ perform taken as a penalty. So, an employer must ensure that he\she files the W-2 employee form within the deadline.
What is the W-4 Form and What is the Purpose of the W-4 Form?
W-4 Form is also known as Employee's withholding allowance certificate. An employer issues this W-4 Form to his\her employees who have just joined an organization. If an employee would like to change his\her amount of pay to be withheld in such cases, he\she will have to fill out this form. The w-4 form's purpose is to let the employer know the amount to be withheld from an employee. One has to fill out the W-4 Form carefully so that an employee can avoid paying penalties at tax time. W-4 form allowances help make the most out of the payment of wages for an employee. The IRS advises the employees to use its online tax withholding estimator to ensure that the right amount is being withheld from an employee's pay.
Now, let us have a look at the current Form, W-4. In the year 2020 IRS issued the new Federal W-4 Form. With the new changes made to the W-4 Form, information about an employee's marital status is required. The claim dependents if an employee has a high-paying job, along with the details of multiple jobs if an employee does.
Key Differences and Similarities in W-2 and W-4?
Let us see about W-2 and W-4 form differences. The main difference between W-2 and W-4 is that W-2 is filed by an employer, whereas W-4 is filed by an employee or whenever changes are made in one paycheck concerning allowances. W-4 Form is issued to an employee when he\she joins a job. W-2 Form is a year-end tax form. Ensure that both forms are filled on time and are free of errors.
