Final Answer:
IRS and SSA use Form W-2 to track information related to wages, taxes, and Social Security benefits. Thus D option is right answer.
Step-by-step explanation:
Form W-2 is primarily used by both the Internal Revenue Service (IRS) and the Social Security Administration (SSA) to track information related to employees' wages and taxes. The IRS utilizes the information provided on Form W-2 to ensure that individuals' income taxes are accurately reported and paid, while the SSA uses this data to calculate Social Security benefits for retirees and individuals with disabilities.
The IRS relies on Form W-2 to reconcile an individual's reported income with the income reported by their employer(s). This form contains details about an employee's earnings, taxes withheld, and other pertinent information necessary for calculating income tax liabilities accurately. The IRS cross-checks this information against the individual's tax return to verify the accuracy of reported income and taxes paid.
Simultaneously, the SSA uses the data from Form W-2 to ensure accuracy in determining Social Security benefits. It relies on the reported wages to calculate an individual's Social Security benefits upon retirement or in case of disability. The earnings recorded on Form W-2 over an individual's working years play a crucial role in the calculation of the benefits they are eligible to receive.
Therefore, the collaboration between the IRS and SSA in utilizing Form W-2 is integral for maintaining accurate records of individuals' earnings, tax payments, and determining benefits for Social Security recipients. Both entities heavily rely on the information provided on Form W-2 to fulfill their respective roles in managing taxes and Social Security benefits.