What is the ‘W-2 Form’
The W-2 form is the form that an employer must send to an employee and the Internal Revenue Service (IRS) at the end of the year. The W-2 form reports an employee’s annual wages and the amount of taxes withheld from his or her paycheck.
Explaining ‘W-2 Form’
A W-4 is a form that individuals complete for withholding purposes, whereas a W-2 form is for employers to fill out. The employer must provide the employee their W-2 form by the deadline set by the IRS. Although W-2 Forms have traditionally been filled out on paper, and many people consult tax specialists to make sure everything is correct and that they’re getting the highest possible deductions. Websites such as TurboTax allow people to electronically file their taxes without consulting an accountant, even those who have never filed taxes before.
Role of the Employer
An employer legally must send out W-2 Forms to each of its employees to whom they page a salary, wage, or other form of compensation. This does not include contracted or self-employed workers, who must file taxes with different forms. The employer must send the employee the W-2 Form on or before January 31st each year so the employee has ample time to file his or her taxes before the deadline, April 15.
Components of the W-2 Form
Chances are you’ve been issued a W-2 Form at some point in your life. Each W-2 has the same fields, no matter what the employer. W-2 Forms are divided into state and federal sections, since employees must file taxes on both levels. There are fields that provide the employer’s information, including the company’s Employer Identification Number (EIN) (federal) and the Employer’s state ID number. The remaining fields mostly focus on the details of the employee’s income from the previous year.
Similar Tax Documents
While a W-2 is the most common tax form, there are others that apply only to specific situations. Contracted employees must fill out a W-9 Form prior to work, and they are given a 1099 Form by the company for which they provided service, but only if they completed $600 worth of work or more. Students receive a Form 1098 if they paid interest on college tuition or a student loan that year.
Further Reading
- Finite state markov-chain approximations to univariate and vector autoregressions – www.sciencedirect.com [PDF]
- Financial repression and optimal taxation – www.sciencedirect.com [PDF]
- Pathways to randomness in the economy: emergent nonlinearity and chaos in economics and finance – www.jstor.org [PDF]
- Self-organized complexity in economics and finance – www.pnas.org [PDF]
- The application of continuous-time random walks in finance and economics – www.sciencedirect.com [PDF]
