Maximize Tax Refunds and Avoid Penalties with Five W-2 Tips

SAN ANTONIO, Feb. 9, 2018 /PRNewswire/ -- Form W-2, Wage and Tax Statement, is a vital resource for determining employees' taxes and future social security benefits. To avoid burdensome tax penalties and to maximize your tax refund, it is important to review the form carefully.

The American Payroll Association, the nation's leader in payroll education, has five W-2 tips to ensure your W-2 is accurate this tax season.

1. Verify Receiving All Your W-2s. If you received compensation from more than one company during 2017, you will need to obtain a W-2 from each business. If you didn't receive your W-2 by February 5, contact the company's payroll department to request a 'reissued statement.'

If you earned $600 or more from a single company for freelance or contract work, you will need to obtain a Form 1099-MISC, Miscellaneous Income, instead of a Form W-2. You may be held accountable for all taxes on those earnings.

2. Confirm That Your Social Security Number (SSN) Matches Your Social Security Card. Your name and SSN on the W-2 must match your social security card to receive the social security benefits to which you are entitled. If they do not match, ask your payroll department for a corrected W-2.

3. Compare Your W-2 to Your Final 2017 Paystub.

Items to review on the W-2:

A.  Box 1 will differ from your final 2017 paystub year-to-date gross pay if you participated in a 401(k) or other employer-sponsored savings plan.

B.  The Box 3 total should not exceed $127,200 – the 2017 social security wage base.

C.  Boxes 1, 3, and 5 will be different from your final 2017 paystub year-to-date gross pay if you used pre-tax dollars to pay insurance premiums or for transit benefits, or to contribute to flexible spending accounts.

4. Check For Tax Credits. Depending on your eligibility, you may qualify for thousands of dollars from the Earned Income Tax Credit. Read the back of the W-2 copy B to determine your eligibility.

5. Be Aware That the Amount of Income Tax Withheld May Change In 2018. As a result of the recently enacted tax reform legislation, the amount of income tax withheld from your paycheck may change early in 2018. The new amount will be based on updated withholding tables released by the IRS this January.

The American Payroll Association (APA) is the nation's leader in payroll education, publications, and training. For additional tips and resources, visit APA online at americanpayroll.org.

SOURCE American Payroll Association

Related Links

http://www.americanpayroll.org