What to Do with Your W-2 After Receiving It: A Comprehensive Guide

After receiving your W-2 from your employer last month, you might be wondering what to do with it. The W-2, a critical document in your tax preparation process, records your earnings and taxes withheld for the previous year. Understanding how to handle your W-2 properly is essential to ensure a smooth and accurate tax filing process.

What is a W-2?

A W-2 is a document issued by your employer that summarizes your earnings and the taxes withheld from your paychecks for the previous calendar year. This document plays a crucial role in preparing and filing your income tax returns. It includes detailed information about your total earnings, withholdings, and other deductions. Each W-2 comes with four copies, and each has a specific purpose in your tax filing process.

Four Copies of Your W-2: Their Purposes

Your W-2 comes with four copies:

Copy A: Your personal copy. Keep this copy for your records and to track your earnings and withholdings. Copy B: Your employer's copy. Provide this copy to your employer for their records. Copy C: Transmitter copy. Typically, this copy is given to the Social Security Administration (SSA) to verify your earnings record. Copy D: Federal and state tax forms. You will need this copy to file your federal income tax return and state income tax forms.

Handling Your W-2 for Tax Filing

Once you have all four copies, follow these steps:

Inspect Your W-2: Make sure the information on your W-2 is accurate. Check for any errors or discrepancies and contact your employer for corrections. Review Instructions: Peep the instructions that come with the W-2. These instructions often provide valuable guidance on how to use the information on the form to prepare your tax return. File Your Federal Income Tax Return: Use the information from Copy D to file your federal income tax return. Ensure it is filed by the tax deadline, which is April 17, 2023, this year. Your W-2 must be postmarked by this date if you are mailing your tax return. File Your State Income Tax Return: Use your W-2 to file your state income tax return. Send a copy of Copy D with your state tax form. File Your Local Tax Return: If applicable, send another copy of Copy D with your local tax form. Save Your Personal Copy: Keep the remaining copy for your records. This copy provides a backup of your wage and tax information, which can be useful for audits or future reference.

Keeping Your W-2 for Record Keeping

Even if you do not file an income tax return and are not required to do so, it is essential to save your W-2 for at least three years after the deadline for filing the income tax return you declined to file. This ensures that you have documentation supporting your earnings in case of any future inquiries or audits from the IRS or state tax agencies.

Properly handling your W-2 is a crucial part of your tax preparation process. By following these steps, you can ensure that your tax filing is accurate and that you have all the necessary documentation for future reference.

Remember, accuracy and thoroughness are key to a successful tax filing. If you encounter any issues or have questions about your W-2, don't hesitate to reach out to your employer or a tax professional for assistance.