### Question
How is the term compensation defined?


### Answer
The term **compensation** is defined in *26 CFR § 1.61-2T* as the following:

> the amount reported on a Form W-2 as income for the prior calendar year

#### Citation:
  - *26 CFR § 1.61-2T*
  - Heading: **PART 1—INCOME TAXES (CONTINUED) > CHAPTER I—INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY (CONTINUED)**

