The W-2, W-9 and W-4 Tax Forms Explained - YouTube

Hi everyone. I'm Ara Oghoorian with ACap Advisors  and Accountants, and welcome to another edition of  

the ACap ReCap, where we go behind the blog and  answer some of your most important questions.  

Today we're going to talk about W-4s, W-2s,  W-9s, and why the IRS has so many of these forms,  

and which one you should complete. But,  before we begin, remember to subscribe,  

like and share our channel, and if there's a  topic you want us to cover, email us or send it or  

put a message in the comments section below,  and we'll be sure to cover it in a future video.

The key variable, that dictates, which form  you need to complete is whether or not you're  

an employee or an employer. So, let's start  off with the easy one, which is the employee:  

if you're an employee, you have to complete  what's called the W-4. Now, what's the purpose  

of the W-4? It's to let your employer know how  much of your paycheck you want taken out to  

for federal taxes, because during the year, when  you're getting paid, a portion of your paycheck  

is withheld and used to pay your estimated  income taxes for federal purposes, and the way,  

that your employer knows how much to take out is  by you completing a W-4. At the end of the year,  

when you get the the years over, and the  company has come has closed their books,  

they're going to issue you what's called a W-2.  The W-2 is what you use to file your taxes,  

and on that W-2 is going to show your total  wages, that you received during the year,  

and on the next box it's going to show how  much taxes were withheld from your paycheck,  

and that taxes withheld is what the W-4 was  used for. So, just to recap, the W-4 is used to  

submit to your employer, that says how much you  want taxes withheld from your paycheck, and the  

W-2 is what your employer provides to you, when  at the end of the year to show how much income you  

earned and how much taxes were taken out. A note:  on the W-4 you do not submit that to the IRS,  

you only submit that to your employer, but your  W-2, if you pay for file, you do submit that to  

the IRS, but most cases now people don't pay for  file, so you just need to keep that as a copy in  

the event, that you ever get audited. Now, let's  talk about the more complicated situation: it's  

when you're an employer. If you're an employer,  you either have employees or you have vendors,  

that you pay money to. If you have employees, from  those employees you're going to collect the W-4 as  

I mentioned earlier, and you're going to use that  W-4 to to do the payroll for those employees and  

at the end of the year you're going to issue  those employees a W-2. However, if you have  

non-employees, people that vendors, that you  pay money to, you should never ever pay anyone  

any money without accepting a W-9 from them  first. The W-9 is the vendor, telling you,  

that this is my social security number or  my employer identification number, and that,  

when you issue that money, they're going to use  that to report to the IRS and state authorities,  

that they earned that money. So, as an employer,  if you pay anyone $600 or more, you have to issue  

them what's called the 1099, if you're not sure  what a 1099 is, look at our video above, where  

we talk all about 1099s and the different types of  1099s, and when you have to file a 1099. But just  

to recap, if you pay anyone as an employer, any  vendor not employee, if you pay any vendor $600  

or more during the year, you have to issue  them at 1099, and before you issue them a 1099,  

you have to get some information from that person,  you have to find out what their name is, you have  

to find out what their social security number or  their EIN is, their address and to collect that  

information you need to have it in a W-9. So, you  want to collect that before you actually pay them,  

because when it comes time to actually file the  1099, and if you go back to them and say "Hey,  

I need your social security number or I need your  EIN", it's going to be a little more difficult to  

collect that from them after they've been paid,  because there's really no incentive for them to  

give that to you. But if you collect the W-9  ahead of time, then you'll have that with you  

and you can use that to prepare your 1099. So, to  recap, as an employer, if you pay any non-employee  

$600 or more, you need to issue them at 1099,  but before you actually pay that individual,  

you want to collect a W-9 from them, that's  going to outline what their name is, their EIN  

and their social security number. Thank you for  joining me for another edition of the ACap ReCap,  

if there's a topic you want us to cover, be  sure to include it in the comments section  

below or send us a message, and remember to  subscribe, like and share our channel. Thank you!