In a typical United States payroll context, which statement best describes the purposes of IRS Forms W 2 and W 4?

Introduction / Context:
This question targets knowledge of specific payroll tax forms used in the United States, Forms W 2 and W 4 issued by the Internal Revenue Service. Many multinational companies handle US payroll, and even outside the United States exams sometimes include these forms as examples of payroll documentation. Understanding which party completes each form and what information each form carries is essential for accurate payroll processing and compliance.

Given Data / Assumptions:
- The context is US payroll and federal income tax withholding rules.
- Form W 4 and Form W 2 are standard IRS forms used by employees and employers.
- Only one option correctly pairs each form with its main purpose.

Concept / Approach:
Form W 4 is completed by the employee, usually at the time of hiring or when personal or financial circumstances change. It tells the employer how much federal income tax to withhold from each paycheck based on filing status and other details. Form W 2 is prepared by the employer after the end of the year and reports total wages, tips, and other compensation plus the taxes withheld. The employer sends a copy to the employee and to tax authorities so that employees can file their individual income tax returns.

Step-by-Step Solution:
Step 1: Recall which form is filled out by the employee to indicate withholding preferences; that is Form W 4. Step 2: Recall which form the employer issues annually summarising wages and taxes for the employee; that is Form W 2. Step 3: Compare the options and find the one that describes these two roles correctly. Step 4: Option A clearly states that W 4 is for withholding information and W 2 reports annual wages and taxes, so it is correct.

Verification / Alternative check:
A quick verification is to think about the timing of each form. W 4 is completed at the start of employment or when circumstances change because it guides the withholding on each paycheck. W 2 is generated after year end when total annual figures are known. Any description that reverses this timing or misuses the forms for unrelated tasks such as job applications or corporate tax returns must be incorrect.

Why Other Options Are Wrong:
Option B incorrectly states that W 2 is used to apply for jobs and that W 4 is for corporate income tax returns, which is entirely wrong. Option C claims that both forms record company sales and customer invoices, which are not payroll functions. Option D mislabels W 2 as a time sheet and W 4 as a bank form, neither of which reflects actual IRS usage.

Common Pitfalls:
Learners may confuse form numbers or believe that any tax form can be used for many purposes. Another pitfall is mixing up employer and employee responsibilities, forgetting that employees complete W 4 while employers generate W 2. To avoid mistakes, remember the simple rule: W 4 is about how much to withhold, and W 2 is the year end statement of what was earned and withheld.

Final Answer:
The correct choice is Form W 4 is completed by the employee to declare tax withholding information, while Form W 2 reports annual wages and taxes withheld to the employee and tax authorities..