W2 Vs W4

The main difference between Forms W-2 and W-4 is who completes the paperwork and fills them out. While the employers complete Form W-2, the employees complete Form W-4.

W-2 and W-4 are among the many IRS tax forms used by businesses for their employees to help follow the pay-as-you-go (PAYG) tax system in the United States. These forms are filled out to tell the employer how much tax must be deducted from the employee’s income.

Table of Contents

W2	vs	W4
tells the employee their gross pay and tax withholding for the fiscal year (FY)	Meaning	helps the employer know how much tax to withhold from their employee’s paycheck
filled out using payroll data for the year	Completed By	fill out a W-4 form with their personal information and withholding allowances
filled out by the employer every year by January 31	When Is Each Form Completed?	fills out W-4 while joining a new job as a part of its hiring paperwork
sent to the IRS for each employee by the employer	Sent To	kept as a document to refer to each year during payroll and while filing Form W-2

What is the W2 Form?

The W-2 is an IRS (Internal Revenue Service) form that an employer sends to their employee and the IRS at the end of each year. It stands for “Wage and Tax Statement,” which represents the employee’s annual income and the tax amount that must be deducted from their paycheck.

Items on a W-2 Form

Employees’ paid wages
Tips
Compensation and benefits of the business
Amount of federal, state, and local income tax
Social security administration
Medicare tax withheld

Every business owner fills the Form W-2 for each employee who was paid at least $600 for the tax year.

At the end of the year, that is, every January or early February, an employee receives a Form W-2 from their employer. If an employer fails to do so, they are liable to pay the penalty.

According to IRS, form W2 is also an international return because it informs several important entities about your earnings and the amount of tax you have paid that year.

These entities include:

Federal government
State and local government
You

Important Sections on the W2

Employer identifying information
State income tax paid
Wages, tips, and other compensation
Retirement contributions paid
Social security and medicare payroll taxes paid
Local income tax paid
Employee’s social security number
The name and address of both the employee and the employer
Adjustments to income such as 401(k) contributions

The W2 form also shows how much federal income tax is paid.

What is the W4 Form?

The W4 form is an employee’s withholding allowance certificate. It gives information to employers on how much income tax to deduct from an employee’s pay.

It’s mandatory for each employee to properly fill out this form on the first day of employment and update it if any further changes occur.

This form contains tax filing status such as single, married filing jointly, married filing separately, or head of the household.

Also, this form includes information such as additional job details, details of a working spouse, etc. As an employer, you can use the information in the W4 form to calculate the correct federal tax to deduct at the payroll time.

New employees cannot use the previously filled W4 form. Social security is an exemption here.

Parts of the W4 Form

Name
Address
Social security number
Marital status (i.e., married or unmarried)
Multiple job or spouse’s work information (if applicable)
Number of dependents (if applicable)
Adjustments (if applicable)
Signature
Employer’s name and address
Employee’s first date of employment
Employer Identification Number (EIN)

W2 vs W4 – Key Differences

W2 and W4 forms are important IRS forms that employees and employers should file on time. They might seem similar but have significant differences.

Here the difference between Forms W2 and W4 is mentioned based on various parameters.

Meaning

Form W2 tells the employee their gross pay and tax withholding for the year. On the other hand, Form W-4 helps the employer know how much tax to withhold from their employee’s paycheck.

Completed By

Employees fill out Form W4 with their personal information and withholding allowances.

The employer’s Form W2 is filled out using payroll data for the year.

When Is Each Form Completed?

The employee fills out W4 during onboarding as a part of hiring paperwork.

Form W2 is filled out by the employer every year by January 31.

Sent To

Form W2 is sent to the IRS for each employee by the employer. In contrast, Form W4 is kept as a document to refer to each year during payroll and while filing Form W2.

W2 vs W4