If you are starting a new job or running a business, you will surely come across the two main tax forms, the W2 form and the W4 form. These forms look similar at first glance, but both of them are used for different purposes.
In this brief, we will describe the difference between W2 and W4 forms, why these forms matter and how they affect paychecks and taxes.
What Is the W4 Form?
The W4 form is an IRS tax document, every employee fills out Form W4 while starting a new job. It informs your employer how much federal income tax to withhold from your paycheck.
This form helps the payroll team calculate the correct tax amount based on your:
- Filing status (single, married, divorced)
- Dependents (But allowances have been eliminated entirely under the 2020 redesign (they no longer exist on the form).
- Additional income
- Other personal tax situations
Key takeaway: The W4 form doesn’t go to the IRS, it stays with your employer. But it directly impacts how much you take home each pay period.
What Is the W2 Form?
The W2 form, or Wage and Tax Statement, is a year-end document that your employer sends to both you and the IRS. It shows your:
- Federal and state taxes withheld
- Total wages for the year
- Medicare and Social Security contributions
- Other compensation or deductions
The W2 form is used to file your federal and state income taxes. Employers must send out W2s by January 31 each year. Contact us if you need any help to fill out form W2.
W2 vs W4: Side-by-Side Comparison
| Feature | W2 Form | W4 Form |
| Issued By | Employer (end of the year) | Employee (at the start of employment) |
| Purpose | Reports total earning and taxes withheld | Determines how much tax should be withheld |
| Used For | Tax filling and determining whether you owe or get a refund | Setting withholding preferences for payroll |
| Frequency | Issued annually (usually by January 31st) | Field out when starting a job or making tax adjustment |
| Changes | Can only be updated during the year (through correction) | Can be updated anytime during employment (necessary to change after any change in life status like marriage or child, child birth or divorce) |
Best Practices for Employers Using W2 and W4 Forms
If you are an employer using a platform like E-File Workforce Payroll, here are some best practices to manage these forms correctly:
Collect W4 Forms Promptly
Make sure new employees fill out their W4 form before receiving their first paycheck.
Prepare W2 Forms Early
Use payroll software to prepare and review W2 forms well before the January 31 deadline.
E-File On Time
Avoid penalties by submitting W2 forms electronically via platforms like E-File Workforce Payroll.
Final Thoughts: W2 Form vs W4 Form — Why It Matters
Here’s the bottom line:
- The W4 form is for setting up your tax withholding.
- The W2 form is for reporting your income and taxes for the year.
Both are critical for staying tax compliant and for making sure you are not hit with a big tax bill (or missing out on a refund).
If you want to simplify how you manage these forms, E-File Workforce Payroll can help. From collecting accurate W4s to generating and filing W2s, we help businesses stay compliant and employees stay informed.
Keep reading! Our blogs are filled with helpful guides and expert advice!
FAQs
What is the difference between W2 and W4?
The W4 form is filled out by the employee to determine how much tax should be withheld. The W2 form is prepared by the employer to report what was actually paid and withheld over the year.
Do I need to file my W4 form with the IRS?
No. The W4 form stays with your employer. You only use your W2 form when filing taxes.
Can I update my W4 form after getting hired?
Yes, you can update W4 at any time. In general, it is mandatory to update Form W4 after major life changes (marriage, divorce, or childbirth) of an employee.
When will I receive my W2 form?
The employers have to send the W-2 form by January 31.
Do I need to file both forms?
No, actually, both of these forms are for different purposes. You need to fill out the W4 form when you start a new job (or when life changes), and the W2 form is used at tax time to report your income and tax withholdings.
