Employers provide each of their employees with a fiscal document called a W-2 income statement which defines the gross income earned and all the tax revenue paid in every financial year. The due dates set by the federal government for the employers to ensure that the employees and the internal revenue service is usually 31st January every year. Identification of the amount of tax withheld from the employee as outlined in the W2 income statement is what determine the accuracy of tax file returns by the employee. The W-2 income statement acts as a guide to the internal revenue service usually refunds or taxes the employees less the amount withheld by the employer. Failure of the employer to avail the W-2 income statement to the employee and the internal revenue service subjects the employee to extra charges as this is considered as a default.
Social security earnings and Medicare earnings by the employee are also subject to taxation as required by the social security administration which is summarized 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. The W-2 income statement summarizes all the employee’s monthly pay slips into brief and comprehensive document which everyone would want to work with. The information in the W-2 income statement acts as a backup for the employers to evaluate any possible divergence and enquire for the necessary modifications. 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. The statement is structured in such a way that it features all types of income the employee is subjected to.
Payment of tax a constitutional responsibility of every individual entitled to a pay slip therefore, W-2 income statement cannot be ignored by either the employee or the employer. Advanced information technology has facilitated easy transmission of the W-2 income statement from the employers to the employers and the internal revenue service through electronic means. It is the obligation of employees to ensure that they interpret the content of W-2 income statement provided by the employer and contains that it contains the correct figures.