Whatever is the kind of business you have, those tax forms are really a part of the job, particularly on January and April. There are a lot of people who get confused with W-4 and W-2 forms since they are somewhat related and they have the same names. This would be used for reporting the employee’s tax situation. As a matter of fact, it is a common mistake in the payroll that there is incorrect reporting of holding on the W-4. It is very important that you really know the differences of the two forms.
The IRS must be able to know the income which the people are able to get for the tax year. Moreover, it also requires to have money withheld for the employees’ paychecks to cover the end-of-year tax bill. Those W4 and W2 forms would apply to the employees but not to independent contractors. The independent contractors would have to file their taxes in a different manner.
What you should know is that the W-4 form is actually the tax form that the employer would ask their employees to comply during hire. 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. The employee should fill in according to one’s household earnings.
The different things actually make up that total number of the withholding options, known as allowances, for the withholding taxes. Things that must be considered would include the number of children or the number of dependents, the employment status and the marital status. An employee can actually update the W4 when one has changes in the financial status. The employers are not asked to request for those 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. Moreover, this would list the total amount of the state and federal taxes which the government withheld. This may also include the contributions made to the Social Security on that particular tax year.
You will have to submit the information in April after getting the W2 form to pay your taxes and you also have to bring with you form 1040. The employers must give their employees the W2 form by January 31 each year. The SSA must also receive the same copy by February 29.