The W-4, from you to your employer
The W-4 tells payroll how much federal tax to withhold. The form was redesigned in 2020, and the old allowances are gone. Step 2 applies if you hold more than one job or your spouse also works. Step 3 claims credits for dependents. Step 4 accounts for other income and deductions, and line 4(c) lets you add a flat extra amount to be withheld from every paycheck, which is the simplest lever on the form. A single person with one job fills in Step 1, signs and is done. You may submit a new W-4 at any time.
The W-2, from your employer to you
Every employer you worked for during the year must send a W-2 by the end of January. Read it against your last pay stub.
- Box 1 shows taxable wages, which are usually lower than your salary because pre-tax retirement contributions and health premiums have been removed.
- Box 2 shows the federal income tax withheld.
- Boxes 3 and 5 show Social Security and Medicare wages, often higher than Box 1, since retirement contributions remain subject to those taxes.
- Box 12 carries coded items: D is your 401(k) contribution, W is money put into an HSA, and DD is the untaxed cost of your health coverage.
If a figure is wrong, ask payroll for a corrected form, called a W-2c.
The 1099s, from everyone else
A 1099-NEC reports freelance or contract pay, from which nothing was withheld. You owe income tax on the profit plus self-employment tax of 15.3 percent, which covers both halves of Social Security and Medicare, and you are generally expected to pay in quarterly estimates due in April, June, September and January. A 1099-K reports business payments received through payment apps. The 1099-INT and 1099-DIV report interest and dividends, the 1099-B reports investment sales, and the 1099-G reports unemployment benefits, which are taxable. Congress has changed the reporting thresholds for several of these forms recently, and no threshold changes what you owe.
How the matching works
IRS computers match every form to your return. An omitted 1099 produces an automated notice, often a year later, proposing more tax plus interest. Brokerage forms tend to arrive in mid-February, so anyone with investments should not rush to file in January.
Note Being handed a W-9 instead of a W-4 means the company is treating you as a contractor, with no withholding and no employer share of payroll taxes. If the company sets your hours and supplies your tools, question that classification.
