What is a W-2 form?
The W-2 is a form that an employee receives from his or her employer once a year. It is also sent to the IRS at the end of every year. The total annual wages paid and the taxes that the employer withheld from each paycheck are shown on the W-2 form. Federal law states that the W-2 form must be mailed by January 31st of each year.
It consists of six copies:
Copy A – Submitted to the Social Security Administration from the employer.
Copy B – Sent to the employee to be attached to the federal income tax return when it is filed.
Copy C – Sent to the employee to be kept for their records.
Copy D – Retained by the employer for their records.
Copy 1 – Sent to the employee to be filed with the state or local tax if required.
Copy 2 – Also sent to the employee to be filed with the state or local tax return if required.
What is a W-4 form?
The W-4 form is usually filled out by an employee whenever he or she starts a new job. It tells the employer the right amount of tax to be withheld from each paycheck and paid to the government.
You should review your federal and state withholding information (shown on the W-4 form) at least annually to ensure that it reflects your current tax situation. If you get married, separated, divorced, or have a child, then you need to update your W-4 form.
Whom can I claim as a dependent?
You can claim a dependent if the person is a qualifying child or a qualifying relative. When claiming children, he or she must be your child, stepchild, adopted child, foster child, brother, sister, grandchild, niece or nephew. The dependent should be living with you for more than 6 months of the year and should also be under the age of 19 at the end of the year, or under age 24 and a full-time student for at least five months of the year, or any age and totally, permanently disabled.
What if I do not file my taxes, and/or pay on time?
If you forget to file on or before the due date (usually April 15 of every year) you should file as soon as you can. Willful failure to file a tax return is a misdemeanor pursuant to Internal Revenue Code (IRC) 7203. In cases where an overt act of evasion occurred, willful failure to file may be elevated to a felony under IRC 7201. (1)
The number of electronic filing and payment options increases every year, which helps reduce your burden and also improves the timeliness and accuracy of tax returns. When it comes to filing your tax return, however, the law provides that the IRS can assess a penalty if you fail to file, fail to pay or both.
Here are eight important points about the two different penalties you may face if you file or pay late.
- If you do not file by the deadline, you might face a failure-to-file penalty. If you do not pay by the due date, you could face a failure-to-pay penalty.
- The failure-to-file penalty is generally more than the failure-to-pay penalty. So if you cannot pay all the taxes you owe, you should still file your tax return on time and pay as much as you can, then explore other payment options. The IRS will work with you.
- The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes.
- If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
- If you do not pay your taxes by the due date, you will generally have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes.
- If you request an extension of time to file by the tax deadline and you paid at least 90 percent of your actual tax liability by the original due date, you will not face a failure-to-pay penalty if the remaining balance is paid by the extended due date.
- If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
- You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect. (2)
Have a Federal Tax issue you are dealing with? The Neighborhood Christian Legal Clinic – Low Income Taxpayer Clinic can consult with you to provide advice regarding your IRS tax issues, and/or potentially act on your behalf for FREE if you qualify for assistance (come to a clinic intake session)!
Jim Floyd is the Staff Enrolled Agent at the Neighborhood Christian Legal Clinic – Low Income Taxpayer Clinic.
As an Enrolled Agent, Jim is a federally-licensed tax practitioner with unlimited rights to represent clients before the Internal Revenue Service. This means he is unrestricted as to which taxpayers he can represent, what types of tax matters he can handle, and which IRS offices he can represent clients before. Enrolled agent status is the highest credential the IRS awards.