Form W-2

The federal income tax system is a "pay as you go" system. That means tax is paid as income is earned or received during the year, and is referred to as withholding credit.

Income tax is generally withheld from the following types of income:

• Salaries and wages
• Tips
• Taxable fringe benefits
• Sick pay
• Pensions and annuities
• IRA and 401(k) distributions
• Gambling winnings
• Unemployment compensation
• Certain federal payments such as social security benefits