A document that indicates employee’s gross income and federal tax deductions produced annually by the employer is referred to as W-2 income statement. It is a requirement by the federal government that the employers send W-2 income statements to their employees and revenue authorities before the set deadlines usually by 31st January each year. To file the correct file returns, an employee must identify the amount of tax which has been gradually with held by the employer throughout the financial year as indicated in the W-2 statement. It is the right of every employee to have the exact amount of the withheld money as per the statement refunded or be subjected to tax revenue fee less the amount. It is of note to employees and employees that failure to submit the W-2 income tax to the internal revenue service attracts heavy penalties.
A summary of the employee’s social security and Medicare earnings and their taxation according to the social security administration is clearly indicated in the W-2 income statement. Employees find it easy to understand the information in W-2 income statement as it is prepared in different boxes each with different information.The W-2 income statement is the most effective way for the internal revenue service to identify employees who occasionally default tax payments which is a federal offence. To be a beneficiary of the federal financial aid in colleges and an employee is required to proof that the income is valid which is usually certified by the information contained in W-2 income tax a fact.
The W-2 statement should always be provided along with the employee’s tax file returns as this is easier for the internal revenue service staff to work efficiently. W-2 income statement is essentially a breakdown of the withheld federal tax of the employer by the employee to the internal revenue service. This enables the employees to make their own calculation and make the necessary adjustments with the federal revenue authority. Personal information such as name, identification and pin numbers must of both the employee and the employer must be included in the W-2 income statement. Despite the nature of the job done by the employee, all W-2 income statements are similar factoring in any sort of income received by the employee.
W-2 income statement is very important and should not be overlooked by the employees and the employers. Internal revenue service allows employees to file their tax returns and provide their W-2 income statements via electronic means which is quick and cheaper. Ignorance is no excuse thus employees should take an initiative to ensure that they clearly comprehend the W-2 income statement.