Short Answer 
The W-2 Tax form reports an employee’s wages and taxes withheld, essential for tax filing. Different types of taxes, like property, sales, and federal income taxes, are crucial for financial compliance. In Lily’s case, her gross earnings of $14,450 exceed the standard deduction, necessitating her to pay federal income tax.
Step 1: Understand the W-2 Tax Form
The W-2 Tax form is a crucial document used in the United States, prepared by employers to report an employee’s annual wages and the taxes withheld from their paycheck. Each year, employers must send this form to both the employee and the IRS. It contains important financial details, such as total earnings and federal tax withheld, which are essential for accurate tax filing.
Step 2: Recognize Different Types of Taxes
Various types of taxes can affect both individuals and businesses, which include the following key categories:
- Property Tax: Levied on real estate properties.
- Sales Tax: Charged on the sale of goods and services.
- Federal Income Tax: A direct tax on an individual’s earnings.
Understanding these taxes is important for financial planning and ensuring compliance with tax laws.
Step 3: Assess Lily’s Earnings Conclusion
Based on the W-2 form, it can be concluded that Lily’s gross earnings were $14,450, which is above the standard deduction amount of $12,950. This indicates that she has taxable income. Since her earnings exceed the standard deduction, she is required to pay federal income tax on her income, influencing her overall tax liability.