What is the main use of the Form W-2?

The Form W-2 is primarily used to report an employee's annual wages and the taxes withheld from their paychecks. This form is crucial for tax reporting, as it provides the Internal Revenue Service (IRS) with data about how much an employee earned during the year, including details about federal, state, and local income taxes that were withheld. The information contained in the W-2 is essential for employees when they prepare their tax returns, as it is used to determine whether they owe additional taxes or are eligible for a refund.

Additionally, the form serves as an official record for both the employer and the employee, ensuring compliance with tax regulations and aiding in accurate income reporting. Each year, employers must provide a W-2 form to every employee who has been paid wages, ensuring that the IRS receives accurate information about the payroll taxes withheld throughout the year.