What is the function of Form W-2?

Form W-2 serves the specific purpose of reporting an employee's annual earnings and the taxes that have been withheld from their paychecks over the course of the year. This form is provided by employers to their employees and includes crucial information such as total wages, tips, and other compensation, as well as the amounts withheld for federal income tax, Social Security tax, and Medicare tax.

This information is essential for employees when they file their income tax returns, as it helps them accurately calculate their tax liability and ensures that they are informed about their earnings and tax contributions throughout the year. The W-2 form is a key document used in the tax preparation process, and its accuracy directly influences an individual's financial responsibilities.