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Form W-3

In the US, Form W-3 enables businesses to accurately and compliantly report employee wages and taxes.

  • Definition

  • Sections

  • Filling out the form

  • When to file

  • W-3 vs W-2

What is Form W-3?

Form W-3 (Transmittal of Income and Tax Statements) is a tax form that employers in the United States must file with the Social Security Association (SSA) and the IRS. It reports the aggregate earnings and tax withholdings of up to 50 individual employees. Employers typically submit the form annually along with one or multiple W-2 (Wage and Tax Statement) forms. 

Employers file Form W-2 to detail wages of $600 or more paid to employees from which they withheld taxes. Any employer that files a Form W-2 must also file a Form W-3. While a Form W-2 reports earnings for an individual employee, the W-3 combines all employee earnings in one place. Even if you only need to submit one W-2, it is necessary to submit a W-3. A W-3 can transmit up to 50 W-2s at one time.

Before filing the forms, you must verify that the numbers on your W-3 match those on the W-2s. Any discrepancies might cause the IRS and SSA to contact you.

Sections of Form W-3

Form W-3 is made up of multiple sections to fill out. The first part includes boxes A to H and the second part contains boxes 1 to 19.  Most boxes are self-explanatory but boxes A and B can cause confusion among employers. 

Box A 

Box A references a control number. This is a number an employer may assign to individual W-2s to differentiate different employees. This number is optional.

Box B 

In Box B, employers must indicate "Kind of Payer.” If you file your federal quarterly tax return with Form 941 (like most private businesses), you will likely check the box 941. However, confer with accounting if you are unsure. In Box B, there is also a section titled “Kind of Employer.” Except for non-profit businesses, most employers should check “none apply” here.

Filling out Form W-3

There are several steps to file Form W-3 correctly. 

  1. Access the W-3 Form - Download the form from the IRS website or log in to Business Services Online  (see below for further information) to complete it electronically.

  2. Fill out employer information - Prepare the forms, including your employer identification number (EIN), name, address, and other identification information. 

  3. Calculate W-2 totals - Review all the W-2s the form aggregates and calculate the totals of wages, tips, and other compensation along with tax withheld, Medicare wages, and Medicare taxes withheld.

  4. Fill out employee earnings and tax information - This will include detailed employee information such as names, social security numbers, earnings, and taxes withheld.

  5. File forms with the SSA - You can file Form W-3 electronically, by post, or by using a global HR platform.

There are several ways to file the W-3, including:

  • Electronically with Business Services Online (BSO)

  • By mail 

  • Using payroll software

Online 

To file Form W-3 electronically, you need to create an account with Business Services Online. Once you log in, select “Wage Reporting” from the menu and then select "File W-3/ W-2s Online.” You will need to provide your EIN, name, and address, and fill out the W-2s with the required employee information. The W-3 then pre-fills automatically with the data from your W-2s. Double-check the information and then follow the instructions to submit the form online.

Mail

To file the forms by mail, you should download and print a physical copy of the form, fill it out, and file it by mail. Attach Copy A of each employee’s W-2 to Form W-3. Send the paper forms to the Social Security Administration, Direct Operations Center, Wilkes-Barre, PA 18769-0001 (or 18769-0002 if you use certified mail ). After the forms reach the SSA, they will forward them to the IRS.

Payroll software

Payroll software can help businesses fill out and file tax forms compliantly. This is particularly helpful if you have over 50 employee W-2 forms, as that is the maximum for one W-3.

When to file Form W-3

Employers must submit the W-3 before January 31st each year, along with the accompanying W-2s. Copies of Form W-2 must also be sent to employees before this date. It is not necessary to send copies of the W-3 to employees.

Difference between W-3 and W-2

Forms W-3 and W-2 report similar information, so the forms are easily confused. Any employer that files a W-2 must also file a W-3 to transmit information about their employees' earnings and tax withholdings. 

The Form W-3 form substantiates the information reported on the W-2s. While each employee receives a W-2 documenting their earnings and withholdings, the W-3 aggregates the data for all employees and provides a total on one single form. 

Information on the form includes employee wages, information about federal taxes, income tax details, Medicare and Social Security contributions, employer identification number, and contact details.

Correction forms 

If you make an error on Form W-3 or there is a discrepancy between the W-3 and W-2 forms submitted, you will need to file separate correction forms, namely Form W-3c and Form W-2c.

Key takeaways
Remember:
  • You must submit Form W-3 along with the Copy A of Form W-2 for each employee to the Social Security Administration (SSA). W-3 summarizes the information from all W-2s.

  • The filing deadline for Form W-3 is the same as that for individual W-2 forms. It is typically the end of January, but specific dates may vary, so you should check the current year's guidelines.

  • Employers with 250 or more Forms W-2 are required to file electronically. However, electronic filing is encouraged for all employers as it provides a faster and more accurate processing method.

  • Accuracy is crucial when completing Form W-3, as any discrepancies or errors can lead to processing delays or penalties. You should review the instructions carefully and ensure all information is accurate and complete.

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