If you’re new to the working world, you may be wondering what is an employee W2 form and why is it important? Learn all you need to know in this blog.
Are you hoping for a tax refund? Every year, employers are required to fill out and file an employee W2 form to determine whether the employee owes taxes or is entitled to a refund at the end of the year.
In short, the W2 is important, so if you have yet to evaluate the importance of the W2 form, now’s the time.
If you’re new to the working world, the W2 might seem like a mystery, but we assure you that it’s not as complicated as it seems. We are going to give you a brief yet thorough overview of the W2 and why it’s important.
What Is an Employee W2 Form?
At the end of every year, employers are required to send a W2 form to all of their employees and to the Internal Revenue Service (IRS). The form has financial information on the employee, such as their annual income and how much tax has been withheld from their paychecks.
Whether they notice or not, employees pay taxes periodically throughout the year. Employers generally withhold money from their employees’ paychecks and send it to the IRS to cover things like Medicare and Social Security.
Therefore, when calculating how much tax you owe at the end of the year, you must subtract the tax that was already paid throughout the year. The W2 form will provide you with this information. If you underpaid your taxes, you will owe money to the IRS, and if you overpaid, the IRS will owe money to you.
What Information Does a W2 Require?
W2 forms have a federal and a state section because employees need to file both federal and state taxes.
W2 forms require information about the company, such as its federal and state identification numbers and address. The employer will also input information on the employee’s salary, which will include the numbers both before and after taxes. If the employee receives tips, those earnings will be listed as well.
W2s also include the employee’s personal information such as their full name, social security number, address, and date of birth. This is how the IRS identifies the taxpayer.
When the employer gives the W2 to the employee, the employee must verify their personal information to avoid problems with the IRS later on. It is much easier to correct errors before you file taxes than after.
When Does the W2 Need to Be Filed?
The W2 accounts for income earned over the previous year. In other words, taxes filed in 2020, for example, are based on income earned in 2019.
Employers must send W2 forms to their employees before January 31 of every year. Recipients will need information from the W2 to file their income taxes, and they will need time to do this before the deadline on April 15.
Where Can I Get a W2?
If you are an employer, you will need to create a W2 for each of your employees. A printable W2 form is an easy and quick way to do this. A printable form can be used for a new employee W2 form, a current employee W2, and a former employee W2.
If you are an employee, all you need to do is wait for your employer to provide you with the completed form.
The Importance of the W2
The employee W2 form is extremely important because it determines whether an employee owes taxes or qualifies for a tax refund. So if you’re an employer, don’t leave your employees in a pickle—make sure to provide them with their W2 forms well in advance of the deadline so they have time to organize their taxes.
Want to learn some other helpful tax tips? Make sure you take a look at the rest of our blog!