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W-3 Forms: Everything Business Owners Need to Know


How does the Social Security Administration know what your employee wages were?

That’s the key question when you’re looking at the difference between the W-2 and W-3 forms.

Don’t they work with the Internal Revenue Service? Yes, it’s the same government, and you might think the SSA collects that information from everyone’s federal income taxes. However, the IRS takes taxpayer privacy very seriously. The Form W-2 process does not include sending a copy out to government agencies that aren’t involved in processing federal income tax information.

Instead, it’s the responsibility of you or your company’s tax department to notify the Social Security Administration about taxable wages and tax withholding that includes Social Security.

All-in-all, Tax Form W-3 is a summary return that shows the totals from all individual employee Form W-2s.

Instructions for Form W-3

Completing Tax Form W-3 is not as difficult as it appears at first glance. The control number, which is found in Box A, is optional.

Box B is where you check how you pay employment taxes. The majority of companies pay on Form 944 or Form 941.

Box C is where you include the total number of W-2s that are being reported and included.

Pay special attention to Boxes E, F, and G, as they are used for administrative purposes. This is where you will include your employer ID number, business name, and address.

In Boxes 1 through 14, you enter the totals for all the W-2s for that particular category. For instance, Box 1 asks for the total wages, tips, and other compensation. Box 10 is for dependent care benefits, and the one after is for nonqualified plans. This part of the form looks quite similar to tax form W-2.

Boxes 15 through 18 are the totals for all state income tax and withholding from the Form W-2s.

To finalize the process, you must sign your Tax Form W-3.

Transmitting Your Tax Form W-3: Transmittal of Wage and Tax Statements

The W-3 Tax Form is a transmittal which is forwarded to the Social Security Administration, showing total earnings, Medicare wages, Social Security wages, and withholding for all employees encompassing the entire year.

The Social Security Administration requires that Tax Form W-3 is sent to them no later than the end of February. Along with this, they also require copies of Forms W-2 for all employees.

To ensure accuracy, the totals from Tax Form W-3 should equal the total on all submitted W-2 forms.

The W-3 form paper copies can be mailed to the SSA’s legal address:

  • Social Security Administration
  • Data Operations Center
  • Wilkes-Barre, PA 18769-000

Don’t get too excited about paying postage at tax time. If you have 250 or more W-2 Forms to send, the IRS requires electronic filing. The business services for the IRS and SSA make it easy to comply with the employment tax forms. Depending on your tax software, you may be able to upload wage files directly to the SSA’s Business Services Online (BSO) portal.

What is the difference between the W-2 and W3 Forms?

Employees and employers have reporting responsibilities. Employees receive a Form W-2 from their employer and use it to do their personal income tax returns.

On the other hand, employers use Form W-3 to report employee combined employee income to the IRS and Social Security Administration. Generally, your payroll software will automatically generate a W-3 Form, but you do want to check that all of the business details on your wage files are accurate.

Who Files W-3 Form?

Every employer required to file a Form W-2 must file Form W-3.

The long answer is that most employers in the U.S. have to file a W-3. Form W-2 is required after paying an employee more than $600 in wages in a given year, whether or not the employer withholds income or taxes from an employee’s wages. They have to file a W-3 for every employee W-2 form they send.

Do I have to attach W-2s to Tax Form W-3 or do I send them separately?

You are required to submit both tax forms at the same time. For this reason, you will need to do all of the prep work accordingly. In other words, you cannot send tax form W-3 in January and your W-2s the next month. The Social Security Administration wants all this information at the same time.

Before you send off these tax forms, make sure your numbers and information are accurate. The totals on Tax Form W-3 should equal the amounts on your W-2s. And of course, double-check to ensure the accuracy of your name, legal address, and employer ID number.

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