For the layman, it can get confusing at times to differentiate between the W2, W4, and W9 Forms. It is however very important that one knows the differences and uses of each of the forms to avoid any issues later on.
For this, let’s explore these forms in brief to understand the difference between W2, W4, and W9 forms.
What is the W2 Form
The W2 form contains details of your salary income, the amount of federal and state taxes, and Medicare that were withheld from your paychecks. It also has the employer ID number, social security number, and many other personal information on the document. It also includes wages subject to Medicare tax, Social Security taxes that are withheld and information on the state income tax withholding, if applicable. One has to fill out a W2 form online or by paper which can be accessed at any local library due by April 15 of a year. Making sure that the W-4 form is accurately filled out is essential so that all employees can be aware and can monitor the amount of taxes that are flowing out of their salaries.
What is the W4 Form
The W4 is a form to let the employer know how much money to withhold from the employee’s paycheck for federal taxes. It helps employees from overpaying on taxes. It is based on allowances, the more allowances one has, the less money the employer will withhold for federal and state taxes. One can also use it to declare that they are exempt from withholdings. There are certain criteria where a person needs to fill W4 form. A person can claim an exemption if they have no income tax liability and they don’t expect to owe any tax in the current year. Marriage and children (dependents) also affect the W4 tax withholdings so, one should make sure to update them.
What is the W9 Form
The W9 form is used to determine the employees’ payroll. This information is used to determine paychecks and the amount of withholdings on the employees’ taxes. The employee will send this form to their employer for them to determine how much to take out. The W9 form contains information like an individual name, whether or not they are operating a business, and their tax classification. One may have to create or request a taxpayer identification number in order to fill out the form.
Comparison Between W2, W4, and W9 Form
The major difference between the W2, W4 and W4 2019 is that W4 is an input document whereas W2 is an output document. W9 is different from a W4 because a W4 is telling the employer how many exemptions one may have and a W9 to find their taxpayer identification number.
An employee uses a W4 to inform the company’s payroll department how much tax to withhold from their earned income. Then, at the end of the year, a W-2 reports year-end earnings and deductions. The W-2 is provided by the employer to the employee, summarizing gross pay for the year. This includes information on how much was taken out of the employee’s gross pay for deductions, like state and local taxes.
When comparing the W4 vs W9 forms, the clear difference is that an employee fills out Form W4 while an independent contractor fills out Form W9 and in the case of the employer, they have to fill out Form 1099.
Hope you understand the clear difference between these three forms.
