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W-2’s and 1099’s Explained

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Activities:

Scenario A - John and Jane's Story 

Scenario B - Jane's Story

Quiz

           


What is a W-2?

This is a wage and earnings statement that your employer sends to you at the  end of the year. It shows how much you made and how much was withheld  for taxes. These amounts are broken into federal, state, and local amounts. 

Treat these documents with care. Sometimes they can be hard to  replace. You will need to contact your employer(s) for additional copies, not  the State or IRS. It may be a smart decision to make a photocopy to  keep for your records. Keep these for at least 4 years. Sometimes it could take  a while for an error on a tax return to be identified and keeping these documents  safe will make fixing errors much easier. They are also necessary for amending  a tax return later, in case you discover an error on your own  that needs corrected.

To amend an already-filed tax return, use form IT-1040X for the Ohio income taxes and form SD-100X for the school district income taxes.

The image below is a sample W-2 form that is similar to what would be sent to you by your employer. This will normally arrive on or before January 31 following the tax year it is for. So on or before January 31, 2012, you will receive your 2011 W-2.

W2

 

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Do you have a 1099?

  • If you are issued a 1099 as your income statement from your employer, this is because you are considered self-employed and performed a job for the company issuing the 1099. This means you are responsible for making estimated payments for your taxes IT-1040ES instead of the employer withholding from your pay and remitting on your behalf.
  • You will note that there may be a place for state taxes paid on this form, but in most cases this will be empty.
  • Other reasons someone would be issued a 1099 could be having received unemployment income, lottery winnings, retirement income, interest earnings on a savings account or dividends paid from investments.

 

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Other points to remember about your W-2’s/1099’s:

  • These are documents issued by your employer, not the state or federal government. If you need replacements or corrections made, contact your employer’s payroll department or human resources department.
  • You will receive several copies of the same form. Many are labeled as “state copy” or “local copy” or “federal copy”. Ideally, the state copy should be used for your IT-1040, and the local copy should be used for your SD-100. However, be sure to check the locality description to ensure you are using the correct district. Only claim withholdings on your Ohio IT-1040 if your W-2 states that Ohio was the state taxes were paid to. This is found in box 15 as shown in the example image. The amount of taxes paid to Ohio would be found in box 17.
  • You will find the taxes paid to a taxing school district in boxes 19 and 20. Be careful as there may be more than one locality that taxes were paid to, such as municipal income taxes. For school district tax, the locality name should appear as the name of the school district with an abbreviation of SD, LSD, CSD, or EVSD after it, or you will see a 4-digit number along with SD by it. (e.g. Lancaster City School District could appear as Lancaster CSD or SD 2305). If you only see the description “Lancaster” in the box, this is for city taxes and would be used for filing a tax form with that city. Do not use this information for school district taxes.

 

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