What’s a W-4 form and How about a W-2 Form?

Most of us don’t look at these complicated IRS forms on a daily basis, so when we do, we’re pretty lost!  However, it’s important to know the difference between a W-4 and W-2 as both impact how much tax is taken from your paycheck and how big your refund may be when you file your taxes.

When do I need to look at these IRS forms?

W-4: You’ll receive a blank W-4 when you start a new job. As a new employee, you’ll be required to fill out this form.

W-2: Each year, at the end of January, you’ll receive a W-2 from each of your employers. You’ll refer to this form when preparing your tax return.

For those of you unsure of what a W-4 form is- it’s one of the forms you were handed upon your first days of employment at your job. To be more precise, a W-4 form is used by your employer to determine the amount of taxes to be withheld from your pay. The number of exemptions claimed on it directly affects your tax refund or tax due.

How to Fill Out a W-4 Correctly

One of the first things you have to do when you get a new job is fill out a Form. It is essential to complete a W-4 correctly because it determines how much tax will be withheld from your pay and how large your tax refund will be.The first half of the form is pretty easy. You just have to fill in your name, address, and marital status.Then you have to figure out how many allowances to claim. This number will determine the amount of your withholding.

Number of allowances to claim

Generally the number of allowances you should claim will correspond to the number of personal and dependency exemptions you can claim on your tax return, but this is not always the case. Claiming zero allowances will result in the maximum amount of tax withheld. Every additional allowance you claim on top of that means that a little less tax is withheld.