RISMEDIA, January 24, 2011—Taxpayers receive the most important tax form of the year in January: Form W-2, Wage and Tax Statement. Your 2010 income tax and future Social Security benefits are based on it, so its accuracy is vital to your short- and long-term financial health.
The American Payroll Association offers W-2 tips to save you time, money and headaches this tax season:
1. Increase your paycheck in 2011. The average person overpays taxes by nearly $250 a month, according to the IRS. Making minor adjustments to Form W-4 can increase your paycheck. The W-4 assistant at www.nationalpayrollweek.com/W4 helps determine the withholding allowances you claim on Form W-4.
2. Don't forfeit free money. Read the back of W-2 copies B, C, and 2 to determine if you are eligible for credits. You could be missing out on thousands of dollars in tax credits.
3. Review your W-2 carefully against your final 2010 paystub. If your W-2 seems incorrect, contact your payroll department.
Important items to review:
A. Box 1 should differ from your final 2010 paystub year-to-date gross pay if you participate in a 401(k) or other employer-sponsored savings plan.
B. Box 3 total should not exceed $106,800 – the 2010 social security wage base.
C. Boxes 1, 3, and 5 should be less than your final 2010 paystub year-to-date gross pay, if you use pre-tax deductions to pay your insurance premiums or to contribute to medical or dependent care, parking, or transit flexible spending accounts.
4. Ensure your Social Security Number (SSN) matches your Social Security card. The name and SSN on your W-2 must match your Social Security card to receive your benefits. Ask the payroll department for a corrected W-2 if they do not match.
5. Make sure you get all your tax forms. You should receive a W-2 from every company that paid you in 2010 by January 31. Contact the payroll department of any company you worked for in 2010 that didn't send you a W-2. Request a 'reissued statement' to replace lost W-2s. If you earned more than $600 from a single company for any freelance or contract work, you should receive Form 1099-MISC, Miscellaneous Income, instead of a Form W-2.