Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which form documents the annual totals of gross pay and all tax withholding for an employee?

1. W-2

2. W-4

3. 1099

4. Form 1040

The correct answer is: W-2

The correct answer is the W-2 form, which provides a summary of an employee's annual earnings and the total amount of taxes withheld from their paycheck. Employers are required to issue a W-2 to their employees by the end of January each year, detailing the employee's gross wages and the various tax withholdings such as federal income tax, Social Security, and Medicare. This document is a critical component of the tax filing process, as employees use it to accurately report their income to the IRS and claim any applicable deductions or credits when preparing their tax returns. In contrast, the W-4 form is utilized by employees to inform employers of the amount of federal income tax to withhold from their paychecks, but it does not document annual totals. The 1099 form is generally used for reporting income received by self-employed individuals or contractors, rather than traditional employees. Form 1040 is the standard IRS form for individual income tax returns that individuals file, but it does not serve the purpose of summarizing gross pay and tax withholdings for an employee like the W-2 does.