Form W-2 vs. Form W-4: What’s the Difference & How to File

The tax filing time is fast approaching and in this blog, we will discuss some important aspects related to a couple of documents every employer must submit to the IRS ( Internal Revenue Service) before the due dates. Yes, you guessed it right! We will discuss the IRS Forms W-2 and Form W-4. After going through this blog, you will be clear about how these forms differ and how to file them.

Form W-2 vs. Form W-4: the Differences

Both these can be found online at the IRS.gov website. These forms must be filled out for every employee in an organization.

We will discuss their differences in the sections below-

A) Who should File?

Form W2: An employer needs to provide this form to each and every employee by 31^st January every year. The filled-up W-2 Form must be sent to the IRS for an employee if he is paid over $ 600, irrespective of whether the employer collected any income, Social Security or Medicare tax from the employee. Form W4: Every employee included on the payroll of a company must fill out this form before the expiry of the first month of employment

B) What information do they Contain?

Form W2: This IRS form provides information about the earnings of an employee. It includes details of their gross pay, federal tax, tips and bonuses, Medicare taxes and Social Security. The W-2 Form also reflects additional deductions such as contributions to retirement plans. Form W4: It informs the employees of the amount of income to withhold from their paychecks. The calculation is based on their marital status, the number of dependents and so on.

C) When should these Forms be Filed?

Form W2: Employers need to file this form every year. To report withholdings for the previous year, the employers have to submit a copy of the withholding report to the IRS and the employees by 31^st January. Please note that a W-2 reflects payroll and tax information from the previous year. For example, a W-2 filed in January 2022, will reflect data from 2021.

Form W4: Usually, new employees need to submit this form after starting their new role and before their first payday. Also, they must fill out this form every time their financial situation changes and their withholding from each paycheck needs to be changed.

Form W-2 and Form W-4: How to File?

W2 Form: Filing instructions

A blank W-2 form is available on the IRS website. Please note that the employers are solely responsible for completing the W-2 forms for each of their employees annually and filing them with the SSA. The SSA recommends electronic filing, but W-2s can be physically as well. 

You can engage an accountant or payroll administrator to help with W-2 filings. Additionally, many software platforms such as Sage facilitate the filing of W-2s through their platform.

To complete the W-2 form, you will have to fill out the following for each of your employees:

• The Social Security number of the employee.
• You are EIN (Employer Identification Number).
• Your name, ZIP code and address
• The name, ZIP code and address of the employee.
• The wages and tax withholdings of the employee.