What is a W-2 form?

• A. A statement of an individual's annual wages and taxes provided by an employer that must be included with the employee's federal, state, and city income tax returns.
• B. A form used to claim tax credits.
• C. A form used to apply for a loan.
• D. A form used to report self-employment income.

Answer: (A)

The W-2 is a year-end wage and tax statement from an employer to an employee. It lists total wages and other compensation for the year and shows the amounts withheld for federal, state, and local income taxes, along with Social Security and Medicare taxes. This form provides the exact numbers you use to prepare and file your personal income tax return, whether you mail a paper return or file electronically. It’s not the form you’d use to claim tax credits, nor is it used to apply for a loan, and it doesn’t report self-employment income (that uses different forms and schedules). Employers send the W-2 to you and also to the IRS and state/local tax authorities.