What is a W2 and Why do I Need One?
That time of year is coming again -- the time when you open your mailbox, find your W2 form and realize you have no idea what to do with it. W2 forms, so many numbers and random letters, it's easy to get overwhelmed. Today, we're going to clear up that "What is a W2" question. Let's take a look at what a W2 form does for you and why you need it.
What Is a W2 Form?
A W2 form is a form that an employer is required to send to their employees and the Internal Revenue Service (IRS) at the end of every year. Think of it as a summary of how much money you made throughout the year and how much money has been withheld from your paycheck for taxes.
An employer must fill out a W2 form for any kind of compensation, and send it to you by January 31 (Unless you're an independent contractor. If you're an independent contractor, you need to fill out a 1099 form yourself). A W2 form received in January of 2017 will reflect the income and withholdings of 2016.
Why Do You Need a W2 Form?
Before you can finish your personal tax returns, you must have your W2 form because you must attach your W2 form to your tax returns when you file them. You also need the total amount of withheld tax money before you can figure out if you will get a refund or need to make an additional tax payment.
Because the money withheld from your paycheck is paid for taxes throughout the year, you can subtract the total withholdings on your W2 from your personal tax bill. This calculation is necessary to file your personal taxes correctly.
Reading a W2 Form
Though a W2 form is small, there are a lot of different boxes and codes that can be hard to keep straight. When reading a W2 form, look for the descriptions inside the boxes to figure out what each number is. If you see codes, like BB, DD, or N, you can find what they mean on the back of your W2 form.
You can also use your most recent paystub to calculate all your W2 information. But remember, your own calculations are just estimates. You still need your W2 form to file accurate tax returns.
Getting a W2 Form from a Previous Employer
It can take two weeks for your W2 form to reach you through the mail. If you don't have your W2 from a previous employer right on January 31, don't panic. Instead, contact your previous employer and ask if they mailed the form. You can also make sure they have your correct address or even request another copy.
If you don't have your W2 form by February 14, you should call the IRS. Make sure you have your basic information (name, address, social security number) ready as well as your employers name, address, zip code, and phone number. You should also have your dates of employment and your estimated wages withheld income tax. The IRS will call your previous employer themselves and advise them to send your W2 form.
Never Ask the "What Is a W2" Question Again
There's a lot to digest during the tax season, but with the right tools and information, you'll discover taxes aren't as hard as they seem. Don't let your W2 form stress you out this year.
Let us know if you have any other tax questions. We'll make sure you get everything filed correctly.