Put W-2 forms to work when filing taxes

Reprinted from North American Precis Syndicate

Your W-2 form is more important than you realize.

Both income tax and Social Security benefits are based on the information contained on Form W-2, Wage and Tax Statement. Reviewing the form carefully when you get it from your employer can save you time and money.

The American Payroll Association, a leader in payroll education, offers these tips on how to put your W-2 form to work for you at tax time:

• Expect a W-2 form from every company that paid you in 2006. Contact each payroll department that has not sent a W-2 by mid-March. Have your full name, SSN, employee number and address on hand--especially if you've moved.

• Make sure your name and SSN match your Social Security card. Ask the payroll department for a corrected W-2 if your name and/or SSN do not match. The names and numbers must match for you to recieve your Social Security benefits.

• Obtain another W-2 if you misplace the original. Request a “reissued statement” to replace a lost W-2. A fee may be charged.

• Check your W-2 against your last 2006 pay stub. If a figure on the W-2 seems incorrect, contact the payroll department. The amounts entered in W-2 Boxes 1, 3 and 5 may differ from the year-to-date gross pay on your final 2006 pay stub: Box 1 will differ if you have deductions for an employer-sponsored savings plan such as a 401(k) retirement plan. Boxes 1, 3 and 5 will be lower if you utilize pretax deductions, such as health insurance, dependent care spending accounts, etc.

Box 3 should not exceed $94,200--the 2006 Social Security wage base.

• Check whether you qualify for tax credits. Read the back of W-2 copies B, C and 2 to determine if you are eligible for the Earned Income Tax Credit and an explanation of the W-2 boxes.

• Expect seperate tax forms for 2006 freelance work. If you earned more than $600 in 2006 for contract work from any company, expect a Form 1099-MISC, Miscellaneous Income.

• It's your money: keep more of it. A big tax refund, getting married or having children in the past year are are all signals that it may be time to adjust the withholding on your W-4. Making just a minor adjustment may give you more money each payday.

The W-4 calculator at http://www.nationalpayrollweek.com can help you determine the proper witholding allowances for Form W-4.

For more information, visit http://www.nationalpayrollweek.com.