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

The primary purpose of the W-2 form is to report an employee's annual wages and taxes withheld. This form is issued by employers to their employees at the end of the calendar year and provides essential information for the employees when they file their income tax returns. The W-2 details the total wages earned by the employee throughout the year, as well as the amounts that have been withheld for federal income tax, Social Security, and Medicare taxes.

This information is crucial for accurate tax reporting, allowing employees to determine their total income and tax liability for the year. Correctly reporting this information ensures compliance with tax laws and helps employees maximize their potential refunds or confirm that they have paid enough through withholding to cover their tax obligations.

Other options focus on different tax concepts, such as estimated tax payments, business income declarations, and potential tax deductions, but none of them encapsulate the specific function of the W-2 form as effectively as the accurate reporting of wages and taxes withheld.