1.4 W-4 and W-2 Basics

Notes

Two tax forms matter for every employee.

• The W-4 is filled out when you start a job. It tells your employer how much income tax to withhold from each paycheck.
• The W-2 is sent to you by your employer after the year ends (usually by the end of January). It reports your total pay and the taxes withheld that year.
• You use the W-2 to file your tax return.
• If too much was withheld, you get a refund. If too little, you owe the difference.
• A refund is not a bonus: it is your own money returned after you lent it to the government interest-free.
• Example: $1,500 withheld, but the tax actually owed is $1,300. Refund $= 1500 - 1300 = 200$, so $200.