How To File Taxes Self Employed And W2 – Every year around this time, mailboxes across America are flooded with tax forms. Sometimes, those tax forms go directly to the tax professional, unopened. Sometimes, taxpayers can simply open those forms and type the information, box by box, into their tax preparation software. In both cases, it is common for taxpayers to not understand the meaning of the numbers, letters and other information on those forms. That is about to change.
This week, I’ll walk you through some basic tax forms. The more you know, the scarier some of these types can be.
How To File Taxes Self Employed And W2
A W-2 form is issued by the employer to the employee. Not just for tax reasons, but for some value. An employer has certain reporting, insurance and insurance requirements for employees that are slightly different than those specified by an independent contractor.
Tax Form W 2
The W-2 form’s withdrawal limit is based on dollars – it doesn’t matter. The work was not done on time. Not in the office. Earned dollars (or dollar equivalent) only. The magic number is $600. (or the equivalent amount, including taxable benefits) Each employer must provide a W-2 form that pays at least $600. If any tax is withheld, including Social Security or Medicare, a Form W-2 must be issued to the employee regardless of the amount paid.
Copy A is sent to the Social Security Administration (SSA) along with Form W-3 (Form W-3 reflects the employer’s general form W-2). The deadline for employers to submit information to the SSA is March 28. Copy 1 will be given to any applicable state, city or local tax department. Copy D is held by the employer.
As an employee, you will receive three copies of your W-2 form. Those three copies must be submitted by January 31 each year. Copy B is used to report your federal income tax return, usually on your federal income tax return (unless you file by e-mail, you must give it to the preparer but it is usually not sent to the IRS ). . Copy 2 is used to file a tax return for your state, city or territory and is filed with the appropriate tax authorities. Copy C is for your records (you must keep Copy C for at least three years after filing the application or the due date of the return, whichever is earlier).
The left side of the form is for reporting the taxpayer’s information; The right side of the form is used to report amounts and codes. Local and state tax information is reported at the bottom of the form.
W 2 Form
Box a. Your Social Security Number (SSN) is entered in box (a). You should always double check to make sure this is correct. If not, you will need to request a new Form W-2 from your employer. An error may delay the processing of your return.
Box b. Your employer’s EIN is entered in box (b). An EIN is the same as your employer’s SSN.
Box C. Your employer’s address is written in box (c). This may or may not be your employer’s legal address. Don’t let it get you down.
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Box d. A control number is an internal number used by your employer or the employer’s payroll department. If your employer does not use a control number, box (d) will be blank.
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Boxes E and F. These will appear as a large block on your W-2 form. Your full name is recorded in box (e). It should actually show the name of your Social Security card (the SSA doesn’t go crazy with extensions, even if you use them, so you won’t see it on your Form W-2 if it’s not on the card your Social Security number). If your name does not match the name on your Social Security card, you may need a new Form W-2. If you are not sure, ask your employer. Your address is written in box (f) and must show your postal address – it can be a PO Box – without the symbols (USPS is preferred). If your address on the W-2 form is incorrect, notify your employer: You do not need a new W-2 Form, but your employer must update its records.
The boxes (a), (e) and (f) you are most concerned about, as indicated by the pink circles:
Box 1 shows all taxable earnings, tips, bonuses and other compensation and any other taxable benefits. It does not include deferred elections for retirement plans, pre-tax benefits, or reduced wages. It is unusual for this amount to be less than the amount included in boxes 2 and 3, as the figure (highlighted by the red arrow in my example below) does not include that amount. This figure is of great concern to many taxpayers.
Box 2 shows the total amount of federal income tax withheld from your income for the year. This amount (highlighted by the purple arrow in my example below) is determined based on the selection made on your W-4 form and any excess amount. If you find that this number is too low or too high, you may want to make changes to your W-4 form next year.
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Box 3 All your earnings are subject to Social Security tax. This amount is calculated before any deductions are made, which means that the amount in box 3 may be higher than the amount in box 1, as shown in my example. If you are a high earner, it may be less than the amount in box 1 because boxes 3 and 7 (see below) cannot exceed the maximum amount of Social Security income. In 2013, this amount was $113,700. If you have more than one job, the cap still applies to your Social Security tax.
Box 4 shows the total Social Security taxes withheld for the year. Unlike the federal income tax, Social Security tax is calculated based on a flat rate. The rate is 6.2%. The amount in box 4 must be equal to 3 times 6.2% of the amount in box 4. You must not have Social Security deductions greater than 6.2% of your gross income, and the amount in box 4 must not exceed $7,049.40. In my example, the number is $50,000 x .062, or $3,100.00.
Box 5 shows the earnings subject to the Medicare tax. Medicare taxes usually do not include upfront tax deductions and include many tax benefits. Along with the fact that unlike Social Security benefits, there is no Medicare tax, which means that the amount in box 5 may be higher than the amount shown in box 1 or box 3. In fact, it’s probably the largest number on your Form W-2.
Box 6 shows the amount of Medicare tax withheld for the year. Like Social Security taxes, Medicare taxes are based on affordability. The rate is 1.45%. For most taxpayers, this means that the number in box 6 is 5 times the number in box 1.45% (as shown by the green arrow in my example, $50,000 x 1.45% = $725). However, under a new law that went into effect in 2013, an employer must withhold an additional .9% Medicare tax on wages paid to an individual earning more than $200,000, regardless of filing status. or wages paid by another employer. Because your employer doesn’t know your full financial picture, you may have to pay more Medicare taxes on top of the amount you’re given under the new law, depending on your status. input, compensation and income.
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Tips for reporting to your employer are in Box 7. If this box is empty, it means you didn’t report the tips to your employer (this doesn’t mean you don’t have to report those tips to the IRS).
Box 8 contains written advice on placing your employer. These tips are considered your income.
Box 9 is empty. The reporting requirement for that box expired several years ago and the box has not been removed from the form (pictured).
In Box 10, your employer will record the benefits paid on your behalf through the Personal Care Assistance Program. Amounts paid by a qualified plan under $5,000 are considered nontaxable benefits. That figure includes non-included maintenance benefits of more than $5,000 (if the value is more than $5,000, the benefit is reported in boxes 1, 3, and 5).
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Box 11 is used to report the amount allocated to you from a non-qualified early repayment plan (this amount is subject to tax). This should not be confused with the amount absorbed
Box 12 of the W-2 reporting form is the kitchen sink. Here you will see all types of codes. Not all income in box 12 is taxable. Here is a quick list
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