Question

provide an explanation of w2, and w4. Elaborate on both forms and explain the possible problems these forms can bring to you when filing taxes if filled information of the taxpayer incorrectly.

Answer 1

Solution

EXPLANATION OF W2 FORM

A W2 form reports to IRS about employees annual wages and the amount of taxes that shall be deducted from their wages and deposited with IRS .

A W2 form is also called by the name of wages and taxation statement .It is the form which employer must send to employee and IRS filling the annual wages of employee and amount of taxes withheld from his wages .

A W2 form must be send by every employer, as his legal responsibility , to every employee to whom employer had paid any salary , wages or compensation in any other form however W2 form is not required in case of contracted or self employed worker because they have to fill other forms .

Employer must also use this form to inform to the FICA about employees .

EXPLANATION FOR W4 FORM

At the time of joining new job employer will ask employee to fill W4 form from the employee in which employee will have to mention his status whether he is single , married , etc .

This form desides the amount to be withheld from employee salary and send to IRS with employee name and social security number.

This withholding will be adjusted when the annual income tax return will be filled in month of april .

PROBLEMS IF INFORMATION ARE NOT FILLED CORRECTLY INW2 AND W4 FORMS

Employer is responsible for wrong information in W2 form this employer will have to pay penalty of $ 250 per employee, with annual cap of $3 million . Penalty for intentional filling may raise from $ 250 to $ 500 . It may also trigger audit .

If any wrong information is included in w4 form in that case the employer will withheld less tax than required. This means employee owe government money at the end of year . In this case ot is responsible of both employee and employer to inform to IRS . In thos case employee must file form 4669 statement giving information of payment received by employee without tax deductions .The employerust file form 4670 requesting from relief of payment of income tax withheld . After that IRS will send the balance of taxes to be paid that shall be employee responsibility .

NOTE - PLEASE UPVOTE IT WILL BE A GREAT FAVOUR THANKS