What is a 'W-2' tax form used for?

A W-2 tax form is a crucial document used to report an employee's annual wages and the amount of taxes withheld from their paycheck throughout the year. Employers are responsible for providing this form to their employees by the end of January each year. The information on the W-2 helps employees accurately file their income tax returns, as it includes details about their total earnings, Social Security and Medicare contributions, and federal and state tax withholdings.

This form is essential for individuals to understand their tax obligations and for the IRS to track income and ensure that the correct amount of taxes has been paid. Therefore, it serves the primary purpose of informing the employee about their earnings and tax contributions during the previous year.