What is Form W-2 used for?

Form W-2 is primarily used to report wages, salaries, and tips that an employer pays to their employees, as well as the taxes withheld from those payments. Each year, employers must provide a Form W-2 to each employee, summarizing their earnings and the amount of federal, state, and other taxes withheld throughout the year. This information is critical for employees when filing their individual income tax returns, as it reflects their taxable earnings and any taxes that have already been paid on those earnings.

The form serves to ensure that the correct income is reported to the IRS and to the employee, making it an essential component of wage reporting in the employer-employee relationship.