It?s tax time.
In 75 days, residents of Maryland must have their income tax returns postmarked, and on the way to the Internal Revenue Service. Between now and then, many people will attempt to read a W-2, navigate a W-4, and find out what it means when they get a 1099 in the mail. In order to cut through the red tape, The Examiner contacted several tax professionals and asked them to shed some light on what these forms mean, and the common mistakes people make.
“There are lots of reasons for mistakes, but a large number of taxpayers do hire a paid preparer to have their taxes done,” said Bob Jazwinski, a certified public accountant and personal financial specialist and volunteer with the American Institute of CPAs.
The W-2 form, or what the IRS refers to as the wage and tax statement, is an earnings record that is distributed by employers. The availability of the W-2 for employees has become a point of contention recently. Employers currently have to make an initial copy of the W-2 form available for their employees, but subsequent copies can cost between $45 and $50. If a W-2 is lost through the mail, or other means, but the employer contends it was mailed out, the responsibility shifts to the employee to obtain a copy, no matter what the price.
“So businesses have to give to give a W-2 to employees all the way back [as long as they were employed], but not for free,” said Al Giovetti, a certified public accountant, who passed the enrolled agents exam of the IRS and is the state director of the Maryland Society of Accountants.
The W-4 is a federal withholding form that deals with the amount withheld from an employee?s paycheck for federal taxes. In Maryland, some residents fill out a MW-507. This form is for the amount that is withheld from a worker?s paycheck for state taxes, and is a more specific, complimentary form to the W-4.
Another document that is important is the 1099, a form that is often sent out from banks or other financial institutions or businesses, and deals with additional income. This might include interest, dividends, and other profits from transactions.
TAX SEASON
» From now until filling day on April 17, The Examiner?s Business section will feature a tax tip of the day, based on questions frequently asked of the IRS and local accountants.
» Every Thursday, the Personal Finance page will feature a tax related story to help keep readers up to speed on tax season trends, changes and general information.
