The W-2 form is a form that is filed by your employer that shows how much you made and how much was deducted and pre-paid to federal and state taxes. You might get a portion or all of what you have already paid back as a tax refund when you file your taxes for that year.
W-2: How Much Will I Get Back?
To answer the most common question about the W-2, "How much will I get back?" you need to know what determines what you get back in taxes. When trying to calculate what part of your W-2 you get back, you must start with your total annual income. This can be found in box 1 of the W-2 form.
This amount will be combined with any money you earned from alimony, unemployment, running a business, capital gains or a second job. All of these sources of income will be added together to determine your total income.
Determining W-2 Refund Amount
Once you know how to find out how much you made this year, it is time to calculate the adjustments to your income. Adjustments that can be taken off include contributions to an Individual Retirement Account (IRA), student loan interest and other allowable deductions. This will give you the amount of your Adjusted Gross Income (AGI). The next step is to determine the credits and deductions for which you are eligible.
When determining W-2 refund amounts, most people will be eligible for at least the standard deduction, which is set every year by the federal government. Things that you might be able to deduct include expenses for the care of a child or other family member, business expenses or travel expenses that are related to your job. This will help determine the total amount of taxes that you owe.
Do You Get Money Back From the W-2 Form?
Not everyone gets money back from the W-2 form unless they have overpaid their taxes. In the most common scenario, many will receive a refund, but there are some things that you can do that might make determining the refund amount more complicated. For instance, if you decide to take a deduction for more dependents, you will have a bigger paycheck throughout the year, but you might not get a refund at the end of the year or you might owe taxes.
You can change the deduction amounts using the W-4 form, and it will affect the amount that you have taken out of every paycheck, as well as your refund. If you had a change in circumstances during the year, like you had a W-2 job and quit to start your own business, it will affect if and how much you get as a refund. Any significant change in total earnings during the year, marriage, divorce, periods of unemployment or a child turning 18 can all affect the amount of the refund that you receive.
There are some things that you can do to adjust the amount of refund that you receive if your only source of income is a job where you receive a W-2. You can talk to your human resources department to change your W-4 filing status to adjust the deductions that are taken out. You can also do things like setting up contributions to an IRA and other items that will serve as adjustments to our income to help reduce your tax burden. Much of the information that you need can be found in the Form 1040 Instruction Manual, or you can always call the IRS and ask about your circumstances.