W-2 vs. W-4? The key forms to know when you file taxes in 2024.-VatradeCoin Monitor

W-2 vs. W-4? The key forms to know when you file taxes in 2024.

2024-12-26 09:29:01 source：lotradecoin compliance Category：Contact

Tax Day is approaching, and it will soon be time to begin assembling forms. If you haven't looked at them yet, all those numbers and letters — W-2, W-9, 1099 — can quickly overwhelm you.

Some forms are pre-populated and designed for you to pass on to the IRS. They may be headed to your mailbox or sitting in a "tax documents" portal on a website, awaiting download. In theory, there may be nothing you need to do apart from delivering them to your tax preparer, if you have one, or documenting appropriate sums on your tax return. Other forms will require some action on your part.

More:Tax season can be terrifying. Here's everything to know before filing your taxes in 2024.

Here is a rundown.

What is a W-9 used for?

A W-9 is typically used by businesses to collect a person's identifying information, such as a Social Security number or tax identification number.

A typical reason for filling out a W-9 is that you're an independent contractor, freelancer or gig worker likely to earn more than $600. You may also be asked to fill out a W-9 when you open an interest-bearing bank account or another financial account that delivers extra income.

This form doesn't go to the Internal Revenue Service. But the information you provide on a W-9 will be used to prepare and populate other forms: Read on.

Is a W-9 the same as a 1099?

The main difference between a W-9 and a 1099 is that you fill out a W-9, while the business or entity that is paying you fills out the 1099. In most cases, you should receive any 1099 form by the end of January.

A 1099 form is used to report income that isn't directly earned through an employer. Because there are many different ways to make money outside of a traditional job, there are several types of 1099 forms.

Common 1099s you might see: 1099-G, 1099-K, 1099-R, 1099-Div

Some of the most common 1099s you may receive:

1099-G: details any state or local tax refund that's considered income.
1099-K: summarizes any income you earned, if you made at least $20,000 and had more than 200 transactions on a third-party payment network like Etsy, Airbnb or Venmo.
1099-R: reports distributions of $10 or more from various types of retirement plans, annuities, pensions, insurance contracts, and similar accounts.
1099-Div: used by banks and other financial institutions to report dividends and other distributions to taxpayers and to the IRS.

What is a W-4, and what is it for?

A W-4 is a form you're required to fill out when you work directly for an employer.

It tells your employer how much federal income tax should be withheld from your paycheck based on factors like whether you're married and filing a joint return, whether you have dependents to claim, and whether you work multiple jobs.

Typically, you'll be asked to fill one out when you start a job. But it's a good idea to revisit the form if you notice the amount withheld from your paycheck is much different than what you end up owing in taxes at year's end.

You should also revisit it if your marital status changes, you have or adopt a child, or your employment situation changes.

The IRS has a tax withholding estimator tool that can help you decide what, if any, W-4 adjustments are appropriate.

Is Social Security income taxable by the IRS?Here's what you might owe on your benefits

What does a W-2 form tell you?

A W-2 is the form your employer is required to send to you by the end of January documenting how much money you earned working for them in the prior year and how much tax was withheld from your paychecks. The form will also show how much money you earned from tips, and any benefits you received during the year.

If you worked multiple jobs last year, you should expect to receive separate W-2s from each employer.

You'll need to include each W-2 form in your tax return. The form is especially important because it verifies how much you earned.

What's a 1040 tax form?

The 1040 is the umbrella form you use to fill out your individual income tax return. In the two-page document, you'll record the various kinds of income you earned last year, state whether you'll be taking the standard deduction or itemizing, and report the tax credits you qualify for.

After crunching the numbers according to the instructions on the form, you'll know how much you owe in taxes, or how big a refund you're due.

Who fills out form 5695?

Form 5695 is used to declare any residential energy credits you may qualify for. If, for instance, you installed solar energy-producing roof tiles in 2023, you can claim the Residential Clean Energy Credit with the form.

Importantly, the form does not apply to businesses.