Intro to the W-2 (video) | Tax forms | Khan Academy

Video transcript

so let ‘s talk a small bite about W2 forms which are ace authoritative forms when you are filling out your taxes and to get a sense of what filling out your taxes are even about, let ‘s merely draw a little act of a timeline and I ‘ll draw it right here on the W2 phase so let ‘s say that is class one, so year one. And then of course we go into class two, year two, and let ‘s say you are working at ABC Employer for region of this year, so you are working for them, possibly full year, possibly part of the class. indeed in the adjacent class, you ‘re going to have to fill out your taxes and filling out your taxes are n’t necessarily paying your taxes, you might have been paying your taxes all year, your employer with every pay assay would have probably been withholding some of your income for federal income tax, submit income tax, social security taxes, Medicare taxes, and then when you fill out your taxes by the April 15th deadline, so this is four 15 deadline, you have to get your taxes done by that date, that ‘s when you true it up, if you were paying besides much based on your finical circumstances during the year, then you will get a refund, if you paid besides little based on your particular circumstances, then you ‘re going to have to pay, you ‘re gon na have to truthful it up by that, you ‘re gon na have to genuine it up by that date. And to help you account for this and to help you account for how much you got paid and how much of your income was withheld for these different reasons, your employer issues you a W, issues you a W2 kind. And it sends one W2 form, one W2 human body goes to you, and then one W2 form will go to the IRS, sol precisely so that it knows what happened in that year equally well and any employer you worked for in that class one needs to get you that W2 form by January 31, by January 31 of the next year therefore that you have it there to actually get your taxes done by April 15th and if you have more than one employer, you ‘re going to need to have, you should get one W2 form for each employer. thus now let ‘s just look at what this mannequin is telling us so some of this might be a short self-explanatory. You have your social security count, this is how the IRS keeps racetrack of you. You have your employer identification count, this is how the IRS keeps racetrack of your employer. And then you have precisely the general data, the name and address of your employer, your name and address, and then you have all the information about, well, what is your, what were your taxable wages and tips and compensation and then how much taxes were actually withheld, so we see hera in box one, wages, tips, and other compensation so this is your taxable wages, tips, and other recompense used to calculate your federal income tax then this is basically the number that was kind of input to think about how much was withheld and then this was the actual number that was withheld. then we go to box number three, social security wages. And you might say, well, why is this number unlike than that count ? Well, but they are near, and the argue is sociable security wages may include some things that, or may not include some things that are included in your federal taxable wages so for exemplar in this character, any employee actually gave $ 1000 to their 401k program, that is on a pre-tax basis so they do n’t have to pay taxes on it from a federal income tax point of view but they do have, but it is used to calculate your sociable security tax so they added that second in, so rather of 39,000, it ‘s 40,000, it ‘s what ‘s used to calculate the sociable security tax and that actual tax withhold is correct over hera, $ 2,480. similarly, I always have trouble saying that word, correct over here, we have your Medicare wages and tips and you say, well why are they just listing it again ? It looks like the same number, good sometimes it will be the like number but sometimes it wo n’t be the same number so for model, social security caps out after a certain point and so that ‘s actually another reason why there could be a reality where your wages and tips up here and other recompense might be higher than your social security system and wages if you make a relatively high income but Medicare wages and tips do n’t cap out so these numbers actually might be different depending on the circumstance, but this is the number that was used to help think about how much Medicare tax was withheld, and once again, the withhold, the withholding in general, particularly when you ‘re talking about the federal income tax withholding tax, this is based on things you filled out in a W4 form which we ‘ll talk about in more detail in another video but it ‘s based chiefly on are you single or married, what are and how many dependents do you have ? And as you go into these other boxes, you go into the parts that it ‘s might be empty or they might be filled in, depending on your particular circumstances but they ‘re not as systematically filled in as these top six boxes right over here. so box number seven, these are your social security tips, these are the tips that you reported to your employer that are susceptible to social security tax and you might notice over here in corner three, they alone say sociable security wages, not wages and tips like we have in box five and box one. And so that is actually separated out right over there. Box count eight, allocated tips, this is the IRS ‘s way of keeping track that at least a reasonable sum of tiptoe income is reported, this is tips allocated by an employer and I wo n’t go into it, it gets quite complicated, but it ‘s a share of, if they are a restaurant or a legal profession, a place where people are likely to get tips, they allocate a share based on the tax income, a certain percentage of that to employees and you can about view them as what was likely going to be the tips. And this actually can get into a reasonably complicated discussion, the big takeaway of it is, is if you are getting tips, it ‘s good to keep track of it yourself and it ‘s good to report it to your employer. now as we go into these other boxes, box count nine, I wo n’t go once again into the details of it, but as of the time of this video recording was made, as you can tell, it was made in 2014, this box was no longer used and so that ‘s why it ‘s grayed out. And then as we go down once again, these are many many boxes that do n’t always get filled out, dependent wish benefits, these might be, they are what they say, if you got some type of benefit that helped with childcare or some type of school, that would be listed over here, nonqualified plans, these are things like deferred compensation plans, they frequently apply to kind of higher degree executives but they ‘re precisely there merely to list them equitable so that they can be broken out. now this segment over here, there ‘s a bunch of different codes you can see and I ‘m not gon na go into each of those codes, actually each of those codes could credibly be their own video and if I did ’em all together, there ‘s a whole sic of them, it ‘s a list of if you ‘ve made contributions to, say, things like a 401k plan and in this case, the code D is actually talking about, hey, a $ 1000 contribution was made to a 401k design, we ‘ve already seen that ‘s what accounts for the discrepancy between boxes one and three or between boxes one and five, and obviously, you can list multiple of these. immediately 13, these are equitable checkboxes to see if certain things happened, if you were a statutory employee, once again I ‘m not gon na go into contingent on that, that can get a little bit involved, retirement plan, that distinctly happened here, we just talked about that, third-party disgusted give, that ‘s if possibly your employer had a indemnity plan for ghastly wage and so you received from the insurance company as opposed to from your employer. Box 14, early, it is what it says, it ‘s space for your employer to kind of list other types of odds and ends that might have been relevant to you. And then after that, we start breaking into the country and local wages and taxes, so you see over hera in corner 15, you can list the submit or states, up to two right over that you might have worked in, in that class, even for this one employer, possibly you moved for that same employer in that lapp year and you can list the name of the department of state but besides the country ID count which is how the IRS keeps track of the states and it ‘s in truth just keeping the information to be a little morsel pleonastic thus in case there ‘s a mistake, people can even keep track of things. then if you ‘re in a state of matter with state income taxes, well you would be doing this if you ‘re in a state of matter with state of matter income, if you ‘re in a state with state income taxes, you would list your wages, tips, and recompense that are susceptible to state income taxes hera, and then you would say, well what was actually withheld ? then, 18 and 19 and 20, if you are in a city that besides collects income tax, place like New York City and there ‘s others, that ‘s what you list over here, the wages that are susceptible to it, how much you paid, and the actual vicinity name.

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