Difference Between W4 and W2
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What is W4?
A W4 form is a document used by employers in the United States to gather information from their employees that is necessary to calculate the amount of federal income tax to withhold from their pay. It includes details such as the employee’s filing status, allowances, and additional withholdings.
Examples of W4
Here are a few examples of situations where employees need to fill out a W4 form:
- A new employee starting a job
- An employee experiencing significant life changes such as getting married or having a child
- An employee wanting to adjust their tax withholdings
What is W2?
A W2 form is a document provided by an employer to their employees at the end of each tax year. It summarizes the employee’s earnings and tax withholdings throughout the year and is used to file their individual income tax returns.
Examples of W2
Here are a few examples of situations where employees receive a W2 form:
- An employee working for a company for the entire tax year
- An employee earning wages subject to income tax withholdings
Differences Table:
| Difference Area | W4 | W2 |
|---|---|---|
| Filing Purpose | A form filled by employees to inform employers about tax withholdings. | A form provided by employers to employees for tax filing purposes. |
| Frequency | Needs to be filled out whenever there are changes to an employee’s tax situation. | Provided annually at the end of each tax year. |
| Information Captured | Employee’s filing status, allowances, and additional withholdings. | Employee’s earnings, tax withholdings, and other income-related information. |
| Tax Withholdings | Used to calculate the amount of federal income tax to withhold from employee’s pay. | Summarizes the tax withholdings made throughout the year. |
| Importance | Crucial for ensuring accurate tax withholdings and avoiding under or overpayment of taxes. | Required for employees to file their individual income tax returns. |
| Submission | Filled out by employees and submitted to employers. | Provided by employers to employees. |
| Modifications | Can be updated or modified by employees whenever necessary. | Cannot be modified by employees once provided by employers. |
| Legal Document | Not a legal document. | Considered a legal document for tax filing purposes. |
| Tax Liability | Does not directly determine an employee’s tax liability. | Helps determine an employee’s tax liability for the year. |
| Personal Details | Includes personal details like filing status, dependents, and deductions. | Includes personal details like name, social security number, and employer identification number. |
Conclusion:
In summary, the W4 and W2 forms serve different purposes in the American tax system. The W4 is filled out by employees to inform employers about their tax withholdings, while the W2 is provided by employers to employees for tax filing purposes. The W4 is updated whenever there are changes to an employee’s tax situation, whereas the W2 is provided annually. Both forms are important for accurate tax withholdings and individual tax filing.
People Also Ask:
Here are five common questions that readers might have about the W4 and W2 forms:
1. Can I update my W4 form during the tax year?
Yes, you can update your W4 form to reflect any changes to your tax situation throughout the year.
2. How do employers use the information from the W4 form?
Employers use the information from the W4 form to calculate the amount of federal income tax to withhold from your pay.
3. Do I need to submit a W4 form if I’m starting a new job?
Yes, new employees are required to fill out a W4 form to provide their tax withholding information to their new employer.
4. Can I request a copy of my W2 form from a previous employer?
Yes, you can request a copy of your W2 form from a previous employer if you did not receive it or misplaced it.
5. Are the W4 and W2 forms the same for every state in the US?
While the W4 and W2 forms are standard for federal tax purposes, some states may have their own equivalent forms for state tax withholdings.
