Payroll Association Shares W-2 Tips for Taxpayers
With taxpayers having to navigate some changes this tax season, the American Payroll Association is making sure they’re ready to file with these five W-2 tips.
Tax season is officially here, so make sure you have your W-2s ready.
While individuals could begin submitting their tax returns on January 23, the deadline isn’t until April 18—three days later than usual thanks to a DC holiday and how the weekends fall.
This year, the IRS is expecting to receive 153 million individual tax returns, with more than 80 percent being filed electronically. In addition, a new law aimed at reducing tax fraud goes into effect this year, which could possibly cause early filers to receive their refunds later than usual. Because of the “Protecting Americans from Tax Hikes (PATH) Act of 2015,” the IRS has to temporarily hold refunds for returns that claim the earned-income tax credit or the additional child tax credit, so affected individuals shouldn’t expect to access their refunds until February 27.
“For this tax season, it’s more important than ever for taxpayers to plan ahead,” IRS Commissioner John Koskinen said in the press release. “People should make sure they have their year-end tax statements in hand, and we encourage people to file as they normally would, including those claiming the credits affected by the refund delay.”
Setting aside any changes coming to the tax process this year, the season is always fraught with confusion. To help people complete their taxes successfully, the American Payroll Association (APA) has released five tips for ensuring your W-2 form is handy and accurate.
1. Get hands on. First, make sure you have all the forms you need to properly file. If you haven’t yet received your W-2s, ask your company to reissue yours; and if you worked for multiple places in 2016, collect your W-2s from each of those organizations.
Also, depending on the type of work you performed, you may need something other than a W-2. For example, individuals who earned more than $600 through freelancing or contract work need a miscellaneous income form.
2. Check your social. Verify that the social security number listed on your W-2 form matches your social security card. If that information is incorrect, you may miss out on some social security benefits, so request that it be fixed.
3. Compare with final paystub. Once you receive your W-2 form, compare the information listed to that on your final 2016 paystub. APA notes that box 1 will differ from the year-to-date gross pay on the paystub if you’re enrolled in a 401(k) or other employer-sponsored savings program.
In addition, the total in box 3 should not be more than $118,500, which is the 2016 social security wage base; and boxes 1, 3, and 5 will differ from your year-to-date gross pay if you use money pre-tax for insurance, transportation benefits, or flexible spending accounts.
4. Look for tax credits. Double check which tax credits, like the earned income tax credit, you qualify for. Reading the back of your W-2 form—specifically sections B, C, and 2—could save you cash.
5. Save some money. APA says if your refund exceeds $1,000, you should adjust your W-4 Form, which dictates how much your employer withholds from your paycheck for federal income taxes, to better reflect your tax liability. Doing so could bump your pay.