Every employee as well as entrepreneur should be aware of taxes he or she should pay during their work time. There are two famous forms used to organize the amount of money you should pay. These are forms W-4 and W-2. They are closely connected nevertheless, there are certain important differences.
Both of them touch a person’s tax situation but from different sides.
Read the information below to clarify the inequality of these two certificates.
This is a document that is necessary while deciding the amount of money that may be withheld from an individual’s salary. There are factors that can lead to decreasing or increasing the level of payment. An employee should inform the Internal Revenue Service about his or her marital status, children, additional jobs, savings, any dependents and so on. Shortly speaking, you need to mention all the moments that influence your financial status.
In case, you earn less than $800 per year you are not required to prepare this form.
Fill out it when starting a new job. A person should also submit a new W-4 form when his or her personal and financial circumstances have changed.
If you want to decrease the amount of tax you should claim for 1, 2 or 3 allowances.
If you are single, don’t have dependents and have only one job, then ask for 1 aids.
In case, you are married and have several workplaces, you need to claim 2 allowances.
If you also have a child, 3 allowances are possible.
Collect all the necessary documentation to support your application and sent it to Internal Revenue Service. Wait for an approval. Be careful while filling out the blank form as ane mistakes may cause a delay and even denial of your petition.
This is a tax form that every employer must issue to the employee. It is timed to the end of the year and contains the total of the individual’s revenue. It should include salaries, federal and state taxes withheld, and fees to Social Security Administration. Once you received this form, review all the data provided in it. Thereafter, submit this information with 1040 form.
You should receive W-2 by January 31 and send its copy not later than by February 29.
Be attentive with this document and make some photocopies to keep.
Now you can see the difference between these two certificates. Be attentive and accurate while preparing and working with them. Pay attention to the details in order to avoid any misunderstandings and errors.