The difference between a W-2 and W-4 is that the W-4 tells employers how much tax to withhold from an employee’s paycheck; the W-2 reports how much an employer paid an employee and how much tax it withheld during the year. Both are required IRS tax forms.
W-2 Form: Employee’s Annual Earnings
The W-2 form is completed by employers and provided to employees. It summarizes an employee’s annual earnings and the amount of taxes withheld from their paychecks throughout the year.
W-4 Form: Withholding Allowances
The W-4 form is completed by employees and submitted to their employers. It is used to determine the amount of federal income tax to be withheld from the employee’s paycheck. Employees fill out Form W-4 by providing their personal information and withholding allowances.
W-2 and W-4 forms are only relevant to businesses that are running payroll. If you don’t run payroll, you don’t need to fill out W-2 or W-4 forms.
You can find both the W-2 and W-4 online at IRS.gov. The W-2 and W-4 must be filled out for each one of your employees and they are part of the HR, accounting and payroll processes in your business.
Key Differences
The W-4 form is used to determine how much federal income tax an employer should withhold from an employee’s paycheck. Employees fill out and submit a W-4 to their employer when starting a new job. The W-4 provides information on the employee’s personal situation, such as marital status and number of dependents, which is used along with IRS tables to calculate the appropriate tax withholding amount.
The W-2 form, in contrast, is filled out by the employer at the end of the year. It reports the employee’s annual wages, tips and other compensation, as well as the total federal, state and other taxes that were withheld from the employee’s paychecks over the course of the year.
The key difference is that the W-4 is filled out by the employee and influences how much tax is withheld from each paycheck, while the W-2 is filled out by the employer and reports total earnings and withholdings at year-end. The W-4 helps determine tax withholding in advance, while the W-2 reports it after the fact.