difference between the w2 and w4 tax forms
Difference Between the W-2 and W-4 Tax Forms
The W-2 and W-4 tax forms are specifically meant for employees, and are both related to taxation formalities. Buzzle outlines the difference between the W-2 and W-4 tax forms.
- If you do not file for a W-4 tax form, your tax is withheld without allowances and at the highest rate.
- If you do not file for a W-2 tax form, you will receive a notification from the IRS and lose out on the refundable tax amount, if any.
- By definition, it is the form sent by the employer to the IRS and his employee when the year ends.
- It contains the employee's yearly pay and the tax amount withheld from the paycheck.
- The form must be filled and sent before the target date expires (the deadline is set by the IRS; usually, it is January 31).
- You need to fill out information, like the amount from your salary that is subject to Social Security taxes, Medicare tax, etc.
- Tax withholding is very important, as the amounts that are withheld from your paycheck are remitted to the IRS. This withholding amount is subtracted from the final tax bill that you submit to the IRS.
- The information you enter in the form must be completely true as the IRS verifies the same from your employer. If any entry is found to be inaccurate, you will be in legal trouble.
- This form is supposed to be filled by the employee before he starts working for the company.
- It reports the employee allowances, deductions, and eligible tax credits.
- Every claimed allowance will reduce the amount withheld on the paycheck.
- Line 5 of the W-4 form contains all the allowances you can claim for. Read them carefully and claim for the ones you require.
- This form is very important as this is what will help your employer withhold the right amount of income tax from the paycheck.
- In short, this form helps you decide how many federal and state withholdings to take out of the paycheck.
- This form needs to be filled every time you start a new job, and also if any major changes have taken place in your life (marriage, divorce, children, etc.).