A W2 is a tax form that reports your taxable income from the previous year. It is a useful tool for employees to track their total income and make informed decisions about filing their taxes. But, it can also be confusing to some, especially if you aren’t familiar with payroll and taxes.
For example, did you know that your gross salary amount – the amount earned before you take any deductions – is almost always higher than what you see on your W2? This may be due to the fact that your W2 includes a number of pre-tax deductions unless you opt out of them.
The best way to explain the difference is to understand that your pay stub shows your gross wages from the time you started work in the previous year, while your W2 reflects your taxable earnings for the entire year. Luckily, this isn’t something that you can’t fix. To get the best possible tax return, you must make sure that all of your income is reported correctly.
Does Having 2 W2S Affect Taxes?
Having two W2S from the same employer or different employers doesn’t raise your taxes in any way, as long as you file all relevant forms correctly. However, it does raise the need to alter withholding tax based on the withholding allowances you claim in your W2s.
One of the most common reasons why you may receive two W2s is if you work for more than one employer at the same time. For example, you might work for a local government and a state school at the same time or you might teach adjunct classes at different universities during the year.
The form W2 includes a series of boxes where your name and address are reported. These boxes also include your social security number and the employer identification number (EIN) for your employer.
Your employer reports information about your taxable income and federal income tax withheld on box 1. You’ll see your statutory earnings, such as state disability insurance taxes withheld, in box 13; retirement plan participation, union dues and health insurance premiums in box 14; and nontaxable income, such as tips and bonuses, in box 15. If your employer checks any of these boxes, you can enter that information separately in box 15. It’s better to use your full name on the form rather than using an alias or an abbreviated version of it.
Why Does Multiple W2S Hurt Your Tax Return?
While it is possible to receive more than one W-2 from a single employer, this shouldn’t hurt your tax return. However, if your W-2 information doesn’t match your wage record, it may be a sign that the company is sending you an incorrect form.
Typically, employers only send out one W2 per employee. This is because it’s important to accurately reflect your income and federal taxes withheld.
In addition to a W2 from each of your employers, you should also receive a Form W4 that details how much of your income is being withheld for federal taxes. Your withholding allowance will depend on your total earnings and the details in your W4 form, such as whether you claim a spouse or dependents.
In fact, you should always use form W4 before filing your Form W2 to ensure that you are claiming the right amount of withholding allowances. You should also be sure to use the right form for each employer and that you haven’t received any duplicate forms. If you have any questions or concerns, reach out to your employer’s human resources department.
What Does a W2 Form Reveal About You?
You might not realize it, but your W2 form reveals a lot about you. It tells you how much you earned, how much federal income tax your employer withheld from your pay and what other taxes you paid, like state and local income taxes.
The first box on your W2 reveals how much you were paid in wages, tips and other compensation. It also includes any taxable fringe benefits, like health insurance or dependent care assistance.
But you might be surprised to learn that the figure in box 1 doesn’t include any pretax deferrals or elective deductions you made during the year, such as 401(k) contributions. Generally, this is the biggest number on your W2 and one that you will be paying most of your attention to when preparing your taxes.
The other boxes on your W2 report more specific information about the earnings you received, including any contributions to a retirement plan or a health savings account, and how much your employer withheld for Social Security and Medicare. They also report information about whether you were a statutory employee, worked as part of a retirement plan, or received sick pay from your employer or another third party.
Do W/2 Employees Get Benefits?
A W-2 employee is directly on your company’s payroll and earns either an annual salary or an hourly wage. They’re generally more expensive to hire than independent contractors because you have to manage tax withholdings and pay state-mandated insurances.
These employees also often receive benefits like health care, 401(k) contributions and paid time off. This can help attract and retain talent, particularly for highly skilled professionals who value social stability and corporate perks.
However, a W-2 employee isn’t always the best choice for every company. Certain industries may be more suited to W-2 workers, such as healthcare, government and education.
To determine whether a worker is an employee or independent contractor, the IRS looks at several factors. These include financial, the type of relationship and the degree of control that the employer has over the worker’s work.
How Do You Tell If IRS is Investigating You?
You might be under investigation by the IRS or its Criminal Investigation Division (CID) if you owe large amounts of money, have multiple W2 forms, have a history of evasion, or have committed other tax crimes. If so, you need to act quickly to establish sound defenses.
The CID is an arm of the IRS that consists of federal special agents who are highly trained financial investigators and carry firearms. They conduct a thorough investigation that can last years while they interview your family, friends, co-workers, employees and business associates to gather evidence on the extent of your tax evasion or tax fraud.
When they start asking you questions, the CID does not want to talk about your personal affairs, but rather to see if you will make a confession or other damaging admission. They may also have subpoenaed bank records and other important documents.
If you suspect that you are under investigation, immediately call an attorney who specializes in IRS criminal cases to discuss your case. You need to protect yourself and your family.
Does the IRS Find Every Mistake?
As tax season nears, it can be a stressful time of year. You’re checking your W-2 forms, logging your deductions and mentally making sure everything is in order.
However, the IRS doesn’t catch every mistake. In fact, a 2017 study found that only 100 out of every 10,000 returns the agency processes contain errors.
That said, even a small mistake can cost you a refund and a fine, so it’s best to fix any mistakes before they become serious problems.
If you’re filing your own taxes, keep all of your tax documents together in one place so it’s easy to double-check your work. Also, consider having an accountant review your return for you, to reduce your chances of error.
You can also use Form 1040X to amend your return, which will allow you to correct errors in your income and deductions. You can send the form to the IRS, along with a letter explaining your changes and documentation showing how they are accurate.
Do I Have to Claim All My W2s?
W2 forms are a vital tool used by the IRS to help file your taxes. They contain important information about your total wages earned, including Social Security and Medicare earnings, and taxes withheld from your paychecks.
Employers are required to send these forms to their employees by the end of January. Some employers choose to mail these documents, but others issue them electronically or provide them through an online HR portal.
If your employer is not sending you a W2 by the due date, you can report it missing to the IRS, file for a substitution on Form 4852, or try contacting your employer.
Most employers now issue W2 forms via email as well, but this is not always secure. You should also keep an eye out for a link to a secure website that your employer sent you through email.
As a rule of thumb, you should receive all your W2s by the January 31st deadline. If yours hasn’t arrived by the end of January, contact your employer and ask for a copy or report it missing.
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