For most people, tax season is filled with endless amounts of paperwork. You may have to track down tax forms from your employer, retirement accounts, health savings accounts, and it can be difficult to stay on top of everything you need. If you're a full-time employee, you should receive a Wage and Tax Statement—also known as a W-2—sometime in January or February. Here's a closer look at the purpose of this form and why it matters when you are filing your taxes.
What is the purpose of a W-2 form?
You may be wondering "Why do I need a W-@?" Your W-2 form is an earnings summary from the previous year. The form covers how much money you made—which may include your salary, wages, or other types of compensation. Your W-2 also includes a breakdown of the taxes your employer withheld and submitted on your behalf. If you’re a full-time employee, you need a W-2 to file your tax return every year.
Where do you get it?
Not all workers receive a W-2 form. In fact, you will only receive one if you earn $600 or more and your employer withheld taxes for you. Self-employed folks or contract employees won’t receive W-2 forms because they submit taxes quarterly on their own. Instead, these workers receive 1099 forms from each of the companies they worked with.
When you’re eager to file your tax return—and possibly get your hands on refund money—it can be frustrating to wait around for your W-2 form. Luckily, companies have an annual deadline for these forms. Employers must send you and the IRS a copy of your W-2 form by January 31st every year. This should give you enough time to file your tax return by the deadline, which is usually April 15th.
As a result of the coronavirus outbreak, the Treasury Department has extended the 2019 tax filing deadline to July 15th. This new deadline happens for everyone automatically, without filing a separate tax return extension.
What does it include?
Your W-2 form includes some of the key details you need to file your federal and state tax returns. This information includes:
- Your Social Security number
- Employer details (employer identification number, company name, and company address)
- Wages, tips, and compensation
- Federal, Social Security, and Medicare taxes withheld
- Dependent care benefits
- Nonqualified retirement plan compensation
Before filing a tax return, you should always double-check to make sure W-2 information matches your records. Make sure your total income and taxes withheld numbers are accurate. If you need guidance, there are line-by-line instructions on the final page of your W-2 form. But if you still feel confused, don’t be afraid to seek professional guidance from a tax professional.
Start getting organized early
Few things are more stressful than scrambling to meet tax filing deadlines. There may be a federal deadline extension this year but you shouldn't wait. Filing your taxes can be tedious—and if you are missing paperwork—it's better to find out sooner than later. By the time July 15th rolls around, you may be relieved to have filed already.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.