W-2, W-4, W-9 Explained
Sometimes it seems like everywhere you turn, there’s another tax form that starts with “w” Is there a rhyme or reason for why they are named so similarly? Are they interchangeable or at least related?
Well, much as we hate to say it, there’s not much of a connection between these forms. The names are easy to confuse, but their purposes are pretty distinct.
To better understand their differences and avoid mix-ups, let’s take a closer look at the purposes of Forms W-2, W-4, and W-9.
Form W-2: Get tax info from your boss on a silver platter
Good news: Form W-2 isn’t something you have to fill out (unless you have a business with employees).
If you? re an employee of a company, your W-2 is a form that details how much you earned over the year, how much you paid in federal and state taxes, and your payroll-related deductions, like retirement plans. Your employer sends it to you before January 31 of each year so that you can use it to file your tax return.
Form W-4: Cover your bases with tax withholding
A W-4 is used to inform your employer how much money to withhold from your paychecks during the year to cover your tax obligation.
You can choose to have more money withheld than necessary (which means a bigger refund in the spring), but you must have enough withheld to cover your tax liability. If you don’t, you’ll end up owing money to the IRS come April, and who wants to be in that situation?
Form W-9: Share your tax info with a client
If you are a freelancer or independent contractor, you will use a Form W-9 to share important tax information with your clients. When a client pays you more than $600 during the year, they will have to fill out a Form 1099-MISC with the exact amount you were paid and send a copy to you and the IRS.
Since one copy has to go to the IRS, the client needs your identification information, like full name and taxpayer identification number, so that the IRS knows the payment went to the right person. The W-9 is the official way to provide this information to your client.