We receive our W-2s every year at the same time, and most of us understand that these forms play an important role in the tax filing process. But how much do we really know about W-2s and taxes? First of all, employers are legally obligated to complete a W-2 form for each employee to whom they pay any salary, wage, or compensation. Employers must mail these forms out before January 31st, allowing taxpayers around 2 months to file before the April 15th deadline. Employers must also file W-2 forms (along with W-3 forms) with the Social Security Administration, and the SSA will then report relevant amounts to the IRS (Internal Revenue Service).
Essentially, your W-2s indicate how much tax was withheld over the course of the year, thus signifying how much you owe or how much you will receive back. In most cases, federal and state taxes are withheld, along with some other taxes (which will vary based on your specific occupation). When you prepare your individual tax return for the year, the withholding amount from your W-2 will be subtracted from the tax due. Because of this, you will only receive a refund if more tax was withheld by the IRS than was necessary. If you want and are expecting a refund, it is absolutely crucial that you fill your W-4s out correctly when you are first hired! We will gladly give you advice on how to do so, ensuring you receive your maximum refund at the end of the tax year.
As an employee, you should receive three separate copies of your W-2. One is for filing your taxes with the IRS, one is for the state tax return, and one is for your personal records. However, even if you do not receive a W-2, you are legally required to report all of your wages earned, including tips (namely if you are working within the service industry).