It’s January. You go to check your email (or mailbox at home) and find an official looking document. You open it to find a form titled W-2. What is this all about?
What is a W-2?
A W-2 is a standard tax form showing the total wages paid to an employee and the taxes withheld during the calendar year, prepared by an employer for each employee.
Why? You will use the information from the W-2 form to fill in information on your state and federal income tax form. You are required to report your annual wages each year based on the income you earned during a calendar year.
Note: If you worked for more than one employer in a calendar year you may have more than one W-2 form.
What is a 1099?
Form 1099 is one of several IRS tax forms used in the United States to prepare and file an information return. The form will report various types of income other than wages, salaries, and tips (for which a W-2 is used instead).
The form is used to report payments if you were working as an independent contractor, had rental property income or income from interest and dividends, sales proceeds and other miscellaneous income. Blank 1099 forms and the related instructions can be downloaded from the IRS website.
Why? You may have different types of income that are not reported on a W-2. You are required to report all your annual income each year based on what you earned during a calendar year. So you may have both W-2 and 1099s to file with your income tax filing based on your income sources in a calendar year.
What's the Difference Between State and Federal Income Tax?
The money withdrawn from your paycheck for federal taxes goes to the United States Treasury and is used to support the national budget.
State income taxes go to the state treasury to finance a variety of state functions, such as education, social assistance and transportation. You can learn more about where your tax money goes by visiting Your Colorado L.I.F.E. webpage “Where Do I Go?”
Why File a State Income Tax Form?
As a resident in the state of Colorado, your state taxes support the government and the many services it provides. Failure to pay your income tax can result in penalties and interest. It’s important that your federal income tax report be filed and the information on that form be used to fill-in the information on your state income tax form.
Missing W-2?
Did you not receive a W-2 from your employer?
This IRS video will guide you through
the steps to take.
And remember...
Colorado state income tax is different from federal income tax. The federal W-2 is used when you file your federal and state income tax return. It shows how much was withheld from your paycheck by your employer and will be used to determine if you owe taxes, owe nothing or will receive a refund.
Each year you will file both a federal and state income tax form.
For information on filing, visit these Your Colorado L.I.F.E. webpages: