What is the primary purpose of the W-2 form?

The primary purpose of the W-2 form is to document wages and taxes withheld from an employee's paycheck over the course of the year. This form is issued by employers to their employees and contains crucial information, including total earnings, Social Security wages, Medicare wages, and the amount of federal, state, and local taxes withheld. Employees use this information when filing their income tax returns to ensure they accurately report income and claim any necessary credits or deductions.

This documentation is essential for employees, as it helps them track their income and understand their tax obligations. It also facilitates the IRS's ability to track income and verify that the correct amount of taxes has been withheld, contributing to accurate tax collection and reporting at a national level.