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W4 VS W2 form: What’s the difference?

What is the difference between a W-2 and a W-4 form?

There is a lot of confusion when it comes to forming W4 and W2. The IRS (Internal Revenue Service) W2 form and W4 both have to do with employers paying their employees, but they’re different in function.

The significant difference between these two forms lies in who fills out the documents. This blog will brief you about everything you need to know about W2 and W4 forms.

W2 forms:

Form W2 is used to record all wages earned by an employee. It also includes the tax amount to be withheld from their paychecks throughout the year. The form is completed by an employer, and both employees and IRS will have a copy of the W2 form at the end of the year. This gives the information they need to file and process tax returns at the end of the year.

W4 forms:

The form W4 is completed by an employee. It determines how much tax employees should withhold from their paychecks. When starting a new job, employees complete Form W4 to determine the withholding tax factor. This amount is determined by your number of factors such as total income, number of dependents, custom adjustments, and so on.

A quick overview of the form W2 and W4


Form W2

  • Record of all wages and taxes withheld
  • Filled by an employer
  • Used by the employee/IRS when filing/processing tax returns

Essentially the W2 is a record of an employee’s income.


What’s the purpose?

Form W4: The W4 form indicates how much should be withheld from each employee’s paycheck and submitted to the IRS. The amount would depend on various factors such as the employee’s marital status, the number of dependents, and personal withholding preference.

Form W2: This is a year-end form that reports an individual employee’s earnings, including gross pay, tips, and bonus. It also includes employee’s federal tax contributions, encompassing social security and medicare taxes. Any additional withholdings such as contributions to retirement plans would also appear on the W2 form.


When it is submitted?

Form W4: Form W4 is typically filled by employees once they begin a new job. However, employees need to fill out the form again anytime if their financial situation changes. Also, they need to be more or less withheld from a paycheck.

Form W2: As said earlier, the W2 form is filled each year by employers. Employers would need to submit a copy of the W2 form to their employees and the IRS by January 31 to report holdings for the previous year. If the employers missed the deadline, they have to face steep fines. As for the W2 form 2021, employers must fill-up the form before the deadline.


W4 VS W2: Wrapping up!

The difference between W2 and W4 form is now completely clear. To make it easy, remember, the W4 is your game plan for how points (income and withholding taxes) will be scored, whereas, W2 form is the scoreboard as points (earnings and actual withholdings) are scored. Once you fill these forms, you can leverage a free paystub generator to make your employees happy and improve the efficiency of your organization.

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