Legal

Difference Between W-4 and W-2

Main difference

W-4 and W-2 are the tax forms issued by the Internal Revenue Service. They require these forms to estimate the income tax of an individual worker. They are both different. Form W-4 tells your employer about your filing status and your tax allowances. The W-2 tells you the taxable income he earned in a year and the amount the employer withheld for taxes. The W-4 is related to federal income tax withholding, while the W-2 is related to your tax return.

What is W-4?

W-4 is a tax form related to federal income tax withholding. Each W-4 form belongs to the employee, therefore each employee’s financial situation is different. The employee cannot know how much tax he will withhold from the employee’s paychecks. It is an estimate of the correct amount of federal income tax to deduct. The employee must consider his family status, number of children, material status, home ownership or rental and number of dependents. It is filled out at the beginning of the work and can be updated at any time if there is a change in the financial situation of it.

What is W-2?

W-2 is also a tax form that is prepared by the employee as the last payment of the year passes. It contains information on your taxable wages along with the tax withheld during the year. It is given by the employer to its employees at the end of a year. The employer keeps this form after the employee fills it out and files this form with Form 1040 at tax time. The employer must give it to their employees by January 31 and must submit their copy to the Social Security Administration by February 29.

Key differences

  1. The W-4 is related to federal income tax withholding, while the W-2 is related to your tax return.
  2. W-4s are filled out at the beginning of each job, while W-2s are filled out at the end of the year after the last payment.
  3. The W-2 can be updated at any time as the financial situation changes, while the W-4 cannot be updated for that year.
  4. The employer keeps the copy of the W-4 form, but does not send it to the Internal Revenue Service and only sends it to the IRS if their withholding tax is significantly less than the tax due. While the copy of the W-2 is also sent to the Social Security Administration for you.
  5. The W-4 stays with the employer, but the W-2 is sent to the Social Security Administration.
  6. Both forms are related to employee taxes.

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