Definition
The annual form employers send reporting your wages and the taxes withheld. It is the backbone of most Americans' tax returns.
Why it matters
The W-2 is the reconciliation between what you earned and what was already paid to the IRS on your behalf. Reading it once demystifies most of a normal tax return.
Example
An employee's W-2 shows $75,000 of wages and $9,800 of federal withholding. Their return computes the real tax bill; if it comes to $9,200, the $600 difference returns as a refund.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.