W-4 vs. W-2: What's the Difference?
Edited by Janet White || By Harlon Moss || Updated on October 14, 2023
The W-4 form helps employers calculate federal tax withholdings, while the W-2 form reports an employee's annual wages and the amounts withheld for taxes.
Key Differences
The W-4 is an essential document used by employers to determine the correct amount of federal income tax to withhold from an employee’s paycheck. On the contrary, the W-2 form serves as an official record, illustrating the total earnings of an employee and the taxes withheld over the past year. Both forms are integral to the U.S. tax system, although they serve different purposes in the tax preparation and filing process.
An employee typically fills out a W-4 form when they begin a new job, or when their financial or personal situation changes, such as after getting married or having a child. The W-2, on the other hand, is prepared by the employer and issued to the employee and the IRS, summarizing the employee’s financial and tax details for the previous calendar year.
The W-4 form is mainly a tool used for calculating the amount of income tax that must be withheld from an employee's paycheck. It requires inputs about an employee’s income, dependents, and other relevant factors. In contrast, the W-2 form offers a comprehensive view of the employee’s annual income and specifically breaks down how much was deducted for state, federal, and other taxes throughout the year.
Employers utilize the information provided on the W-4 to ascertain how much federal income tax to withhold from an employee’s pay. Differently, the W-2 form does not require any action from the employee for its preparation, but it's vital for them when they file their personal income tax return, to verify the income earned and taxes paid.
It's paramount that the W-4 is accurate to avoid under or overpayment of taxes throughout the year. In a different vein, the W-2 is crucial for ensuring that the information submitted to the IRS during tax filing is accurate, to help avoid any potential discrepancies or issues with an individual’s tax return.
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Comparison Chart
Purpose
To determine tax withholdings
To report annual wages and withholdings
Filled Out By
Employee
Employer
Timing
When starting a job or personal changes occur
Annually, sent by Jan 31st of the following year
Main Recipient
Employer
Employee (also sent to IRS)
Usage in Tax Filing
Used for calculating withholdings
Used to file individual’s tax return
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W-4 and W-2 Definitions
W-4
The W-4 includes adjustments for dependents and deductions.
After having twins, Emily updated her W-4 to reflect her new number of dependents.
W-2
A W-2 form documents an employee’s annual earnings and tax withholdings.
Sarah received her W-2 and checked it for accuracy before filing her taxes.
W-4
Employees can revise the W-4 for changes in their financial situation.
Following their wedding, Kevin and Sue revised their W-4 forms to reflect their married status.
W-2
W-2 forms are crucial for filing federal and state income taxes.
Jake utilized the information on his W-2 to file his state and federal tax returns.
W-4
The W-4 allows employees to account for multiple income sources.
John adjusted his W-4 to account for the additional income from his freelance work.
W-2
A W-2 form provides a comprehensive breakdown of various tax withholdings.
Roberto used his W-2 to understand the total amount withheld for federal taxes throughout the year.
W-4
A W-4 may impact the employee’s take-home pay based on claimed allowances.
Jeff claimed fewer allowances on his W-4 to increase his take-home pay.
W-2
Employers are mandated to issue W-2 forms to their employees and the IRS.
As an employer, the company ensures that all employees receive their W-2 by January 31st.
W-4
A W-4 form assists in determining the federal tax withheld from a paycheck.
When starting her new job, Lisa completed her W-4 form to ensure accurate tax withholding.
W-2
W-2 forms may be provided either electronically or in paper format.
Tina opted to receive her W-2 electronically through her employer's payroll platform.
FAQs
How often are W-2 forms issued?
W-2 forms are issued annually, typically by January 31st of the following year.
When should an employee fill out a W-4 form?
Employees should complete a W-4 when starting a new job or when personal or financial situations change.
What specific information is found on the W-2 form?
The W-2 form reports an employee's annual wages and the amounts of taxes withheld for federal, state, and social security.
Can the W-4 form affect the size of an employee’s paycheck?
Yes, the allowances and deductions claimed on a W-4 can influence the amount of tax withheld and consequently, net pay.
Can an employee request to adjust their withholding after submitting a W-4?
Yes, employees can adjust withholding by submitting a new W-4 to their employer at any time.
What is the main purpose of a W-4 form?
A W-4 form helps employers determine the correct federal income tax to withhold from an employee's paycheck.
Who is responsible for filling out the W-2 form?
Employers complete the W-2 form, providing copies to the employee and the IRS.
Can an employee change information on the W-4 after initially filling it out?
Yes, employees can submit a new W-4 to their employer whenever necessary to update their withholding allowances.
Who is eligible to receive a W-2 form?
Any employee who has earned wages or salary from an employer should receive a W-2 form.
Is the W-2 form required for filing taxes?
Yes, information on the W-2 form is vital for preparing personal income tax returns.
Is there a deadline for employers to send out W-2 forms?
Yes, employers are required to send W-2 forms to employees by January 31st of the year following the tax year.
What happens if an employee fills out the W-4 form incorrectly?
Incorrect information on a W-4 may result in under-withholding or over-withholding of federal income taxes.
Does the W-4 form need to be filled out annually?
No, the W-4 does not need to be filled out annually, but it should be updated for significant life or financial changes.
Are there penalties for not completing a W-4 accurately?
Yes, providing false information on a W-4 can result in fines and penalties from the IRS.
How does an employer utilize the information on a W-2?
Employers use W-2 forms to report wage and salary information to the IRS and provide tax information to employees.
Is it mandatory for all employees to fill out a W-4 form?
Yes, employees are typically required to complete a W-4 form to help employers calculate accurate tax withholdings.
What should an employee do if they do not receive their W-2?
Employees should contact their employer or HR department if they do not receive their W-2 by January 31st.
Can an individual access a copy of the W-2 form online?
Some employers and payroll services provide electronic access to W-2 forms.
Is it possible for an employee to have zero withholdings on their W-4?
Yes, an employee can claim exemption from withholding on the W-4, under certain conditions.
Can an employee access the W-4 form online?
Yes, many employers provide electronic access to W-4 forms through payroll or HR platforms.
About Author
Written by
Harlon MossHarlon is a seasoned quality moderator and accomplished content writer for Difference Wiki. An alumnus of the prestigious University of California, he earned his degree in Computer Science. Leveraging his academic background, Harlon brings a meticulous and informed perspective to his work, ensuring content accuracy and excellence.
Edited by
Janet WhiteJanet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
