How to Define a W-2 Form

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A W-2 form is the actual form used for tax purposes showing the IRS and the employee how much money was earned and how much in taxes was paid throughout the year. Use a W-2 form to get credit for taxes paid on an annual income tax return with information from a certified public accountant in this free video on tax terms.

Part of the Video Series: Business & Accounting Terms
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Video Transcript

Now we're going to define a W-2. When the current income tax structure was created in 1954, the Internal Revenue Service developed a pay as you go system for the collection of taxes from wage earners. Each week or month that we receive a paycheck, the employer withholds income taxes on our behalf from those earnings. At the end of the year, a form W-2 is prepared for each employee a copy of which is provided to the employee showing all of his earnings and the various taxes withheld on his behalf. That W-2 form is sent to the IRS so that they know how much you made and a copy is given to you so you know how much you made and can get credit for the taxes you paid on your annual income tax return. It's an actual form, a W-2 form.


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