W-2 and W-4 forms are tax-related documents that every employer must use to report employee earnings to the Internal Revenue Service (IRS). These forms list the salary paid to employees and the taxes withheld from paychecks. They are mandatory for all full-time and part-time employees.
In this article, we will break down the details of a W-2 vs. a W-4 and explain how to file these two tax forms correctly.
The W-2 is short for an employee’s Wage and Tax Statement. Employers need to fill out this form for all employees that earned at least $600 in the given tax year. They need to report it to the Social Security Administration (SSA) either by mail or online by Jan. 31. For example, a W-2 for the tax year of 2022 should be filed by Jan. 31, 2023.
The W-2 form lists an employee’s gross earnings, tips, tax withholdings, compensations, such as Social Security and Medicare taxes, and other contributions to retirement accounts, such as child support. The employer should also send a copy of the W-2 to their local or state tax department and each employee to help them fill out their tax returns.
To complete the W-2, the employer needs the following information:
Many software programs like Aatrix and TaxRight can help you prepare and file the W-2 form.
It is the employer’s responsibility to fill out a W-2 form for each employee using payroll data for a given year. The employer should fill it out and submit it to the IRS by Jan. 31 of the following year.
You can obtain a blank W-2 Form online from the IRS’s official website.
Conversely, a W-4 form is the Employee’s Withholding Certificate. This form lets employers know how much tax to withhold from an individual employee’s paycheck. Employees must fill out a W-4 at the time of onboarding and any time their withholding or filing status changes, such as when they get married or want to file jointly. Inaccurate W-4s or failing to file taxes can result in tax fraud.
Through the W-4 form, the employee has to inform their workplace of the following:
The W-4 form has five steps that need to be completed by the employee. Those include the following:
Here’s an example of a correctly completed W-4 form:
Employees can either print and fill out the form by hand or complete it electronically and send it to the employer.
Your employer may share the W-4 form with you to complete, but it is also available for download online from the IRS’s official website.
Companies require the information in the W-4 form to adjust the amount of tax they deduct from the employee’s paycheck. According to the U.S. tax system, married employees with dependents typically pay lower taxes than single individuals.
Your company’s human resources (HR) or payroll department collects these forms to determine how much tax to withhold from the employee’s wages. IRS’s online tax withholding estimator can help identify how much tax to withhold from employees. You don’t need to file it with a tax agency as it’s only held for the company’s internal processes.
While the W-4 form is used to determine federal tax withholding, some states require employees to fill out a separate form for state taxes. Federal W-4 and State W-4 are similar in structure, but different forms are used to distinguish the amount withheld for state taxes and federal taxes.
States that require separate W-4 forms include the following:
*For companies registered in Colorado and Delaware, employees can fill out the state form or use the federal one for state tax withholding.
New Mexico, North Dakota, and Utah only use the information provided on the federal W-4 form.
Alaska, Florida, Nevada, New Hampshire, Pennsylvania, South Dakota, Tennessee, Texas, Wyoming, and Washington do not require a state form as they don’t have a state income tax.
The table below outlines the prominent differences between a W-2 vs. W-4 forms:
Here are a few tips for small businesses to fill out W-2 and W-4 forms correctly and efficiently:
The W-2 form must be completed for employees but not for independent contractors. Employers should use the 1099-NEC (Nonemployee Compensation) form instead to report taxes for contractors. This typically refers to graphic designers, web developers, consultants, and freelance writers.
For all independent contractors that earned at least $600 during the tax year, the company should file the 1099-NEC form if they meet the following criteria:
The 1099-NEC form is similar to the W-2 as it also reflects what you paid the contractor and how much tax you withheld from their check. Like a W-2, companies should submit the 1099-NEC form to the relevant tax authorities by Jan. 31 of the following year. The form is available for free from the IRS website.
The information to be mentioned in the 1099-NEC form includes the following:
W-2 and W-4 forms are essential documents that must be completed by all employers and employees, respectively. They are used to identify and report how much tax should be withheld from employees’ paychecks. It’s the employer’s responsibility to know how to file the W-2 form correctly and on time, and the employee’s responsibility to complete the W-4 Form upon being hired.
If any questions remain unanswered, please refer to the responses below for some of the most commonly asked questions.
If an employee is wondering how to get a W-2 from a previous employer, they need to contact their employer directly. Employers are required to mail copies of W-2 forms to their employees every year. However, if the employee cannot reach their employer, they can call the IRS at (800) 829-1040 and provide their personal information, including their EIN and SSN. The IRS will then send the former employer a reminder letter to mail the W-2 form to the employee.
If the employee is married and filing jointly with their spouse, they must provide their spouse’s name and personal information and check the box “married filing jointly” in section two. Then, they should calculate the amount of tax to be withheld using the IRS tax calculator.
The employer has to fill out and submit the W-2 every year before Jan. 31. They should do this for every single employee that has earned at least $600 in the given tax year, even if they are not working at the company anymore. On the other hand, the employee must fill out the W-4 form upon onboarding and resubmit it any time their filing status changes.
The W-2 and W-4 forms are available for free download on the IRS’s official website.