Transmittal of Wage and Tax Statements
Form W-3, “Transmittal of Wage and Tax Statements,” is an official form provided by the U.S. Internal Revenue Service (IRS). It serves as a transmittal or summary form that accompanies the W-3 statements sent to the Social Security Administration (SSA). If you’re sending paper copies of W-3 forms to the SSA, the W-3 must accompany them. It acts as the official transmittal form, summarizing the aggregate data from all submitted W-3s.
- Why do you need to file a W-3?
- Who Needs to File a W-3?
- Are there any exemptions to filing a W-3?
- What is the deadline for filing a W-3?
- What is required to file a W-3?
- What are the penalties for W-3?
- Do you need to e-file a W-3?
- Is state filing required for the W-3?
- What elements make up a W-3 form?
- Can you correct a W-3?
Why do you need to file a W-3?
Form W-3, “Transmittal of Wage and Tax Statements,” is essential for several reasons:
Summary for the SSA
- The W-3 serves as a summary form for the Social Security Administration (SSA) that consolidates information from all of the W-2s an employer has issued for a tax year. It provides an aggregate overview of wages, taxes withheld, Social Security, Medicare contributions, and other data for all employees.
- The totals provided on Form W-3 should match the combined totals of the individual W-2 forms. This helps the SSA verify that the amounts being reported are consistent and complete.
Official Transmittal Document
- When employers send W-2 forms (Copy A) to the SSA, the W-3 acts as the official transmittal document. It’s like a cover sheet that provides a snapshot of total wage and tax data for the employer’s workforce.
- If an employer is required to file W-2 forms, they must also submit a W-3. Even if an employer is only filing a single W-2 form, a W-3 is still required to transmit that W-2 to the SSA.
- The W-3 provides a concise record of the total compensation and withholdings for all employees for a given tax year. This can be useful for employers for internal record-keeping and future reference.
Compliance and Penalties
- Properly submitting W-2 forms and the accompanying W-3 is a legal requirement for employers. Failure to accurately complete, submit, or timely file these forms can result in penalties from the IRS.
In essence, Form W-3 ensures that the SSA receives an accurate and comprehensive summary of wage and tax data from employers. This information is crucial for the SSA’s administration of Social Security benefits and for ensuring accurate tax reporting by both employers and employees.
Who needs to file a W-3?
Form W-3, “Transmittal of Wage and Tax Statements,” should be filed by employers who are submitting Form W-2, “Wage and Tax Statement,” to the Social Security Administration (SSA). Here’s a more detailed breakdown:
Employers with W-2s
- Any employer who is required to issue W-2 forms to employees must file a W-3. The W-3 serves as a summary and transmittal form for the W-2s.
Paper Filing of W-2s
- If you’re sending paper copies of W-2 forms to the SSA, the W-3 must accompany them. It acts as the official transmittal form, summarizing the aggregate data from all submitted W-2s.
Even for a Single W-2
- If an employer has only one W-2 to file, a W-3 is still required to transmit that single W-2 to the SSA.
- Employers who file their W-2 forms electronically (which is mandatory for employers submitting 250 or more W-2 forms) typically do not need to submit a separate W-3. The electronic filing system will generate its own summary based on the submitted W-2 data. However, if for some reason, electronic filers need to submit any W-2s on paper, a W-3 would be required for that paper submission.
- If there’s been a change to the business—like it was sold, you stopped paying wages, or you won’t need to file W-2s in the future—you’d typically still file a W-3 for the final year of operation or wage payment.
- Corporations, small businesses, non-profits, government agencies, and any other entities that pay wages subject to federal income tax withholding, Social Security, and Medicare taxes are required to file W-2 forms for their employees, and consequently, a W-3 is also required.
In summary, any entity that’s required to send W-2 forms to the SSA, whether it’s one or many, needs to file a W-3 to accompany those W-2s if submitting by paper. Proper and timely submission ensures compliance with federal reporting requirements and helps avoid potential penalties.
Are there any exemptions to filing a W-3?
Form W-3, “Transmittal of Wage and Tax Statements,” is the transmittal form used to summarize and accompany Form W-2, “Wage and Tax Statement,” when they are sent to the Social Security Administration (SSA). Generally, if an employer is required to file W-2 forms, they also need to file a W-3. However, there are specific scenarios in which a W-3 is not necessary:
- If you are electronically filing W-2 forms with the SSA, you typically do not need to submit a separate Form W-3. The electronic system generates its own summary based on the submitted W-2 data. The electronic version of the W-3 is created automatically.
Certain Payments to Independent Contractors
- If you’re only issuing Form 1099-NEC (or previously 1099-MISC for nonemployee compensation) to independent contractors and not W-2s to employees, then there’s no need to file a W-3.
Other 1099 Forms
- The W-3 is specific to W-2 forms. If you’re submitting other 1099 forms (like 1099-DIV, 1099-INT, etc.), you’d use Form 1096 as the transmittal form, not W-3.
- If you’re not making wage payments that are subject to federal income tax withholding or Social Security and Medicare taxes, you might not need to file W-2s or a W-3. However, be very sure about this exemption, as most compensation for work is subject to these taxes.
- Some foreign employers with U.S. income and tax obligations but without a business or trade in the U.S. might not have to file W-2 or W-3 forms under certain conditions. However, this can be a complex area, and professional advice is strongly recommended.
Remember that these exemptions are specific to the W-3. If you’re required to submit W-2 forms, then in most cases, a W-3 is also required (unless filing electronically).
What is the deadline for filing a W-3?
The deadline for filing Form W-3, “Transmittal of Wage and Tax Statements,” coincides with the deadline for filing the individual Form W-2, “Wage and Tax Statement,” with the Social Security Administration (SSA). The typical deadline is: January 31 of the year following the tax year being reported. However, if any of these dates fall on a weekend or a holiday, the deadline may be extended to the next business day. Additionally, if you discover an error after the initial filing, there are separate deadlines for corrected W-3 forms.
Remember, missing these deadlines can result in penalties, so it’s crucial to stay informed and act timely.
What is required to file a W-3?
Form W-3, “Transmittal of Wage and Tax Statements,” serves as a summary form for the W-2 forms you’re sending to the Social Security Administration (SSA). When completing Form W-3, you’ll need to provide aggregated totals from the W-2s.
Information about the Payer (Employer)
- Payer’s Name and Address
- Provide your legal business name and mailing address.
- Payer’s Taxpayer Identification Number (TIN)
- This could be your Employer Identification Number (EIN) or your Social Security Number (SSN), depending on your business structure. If you’re a sole proprietor, you might use your SSN; if you’re a business entity, you’d use your EIN.
- Payer’s Phone Number
- Include a phone number where the payer can be reached.
Form specific information
- Kind of Payer
- Kind of Employer
- All other information is based on the summary from the W-2 forms.
What are the penalties for W-3?
The penalties for filing Form W-3, “Transmittal of Wage and Tax Statements,” coincides with the penalties for filing the individual Form W-2, “Wage and Tax Statement,” with the Social Security Administration (SSA).
It’s worth noting that the IRS considers each failure a separate penalty. For example, if you file a W-3 late and it has incorrect information, you could face two penalties for the same form.
To avoid these penalties:
- Be sure to file on time.
- Double-check your forms for accuracy.
- Provide copies to recipients by the due date.
- Secure TINs from payees as needed.
Do you need to e-file a W-3?
For W-3 forms, they are only required when paper filing. They do not need to be e-filed.
Is state filing required for the W-3?
Enter the two-letter abbreviation for the name of the state or territory being reported on Form(s) W-2. Also enter your state- or territory-assigned ID number. If the Forms W-2 being submitted with this Form W-3 contain wage and income tax information from more than one state or territory, enter an “X” under “State” and do not enter any state or territory ID number.
What elements make up a W-3 form?
The W-3 contains several boxes, each designed to report specific types of income or information. The boxes are the sum of all the values from the W-2 forms. Here is a breakdown of the boxes on the W-3:
- Box a—Control number
- This is an optional box that you may use for numbering the whole transmittal.
- Box b—Kind of Payer
- Check the box that applies to you. Check only one box. If you have more than one type of Form W-2, send each type with a separate Form W-3.
- Box b—Kind of Employer
- Check the box that applies to you. Check only one box unless the second checked box is “Third-party sick pay.”
- Box b—Third-party sick pay
- Check this box if you are a third-party sick pay payer (or are reporting sick pay payments made by a third party) filing Forms W-2 with the “Third-party sick pay” checkbox in box 13 checked. File a single Form W-3 for the regular and “Third-party sick pay” Forms W-2.
- Box c—Total number of Forms W-2
- Show the number of completed individual Forms W-2 that you are transmitting with this Form W-3. Do not count “VOID” Forms W-2.
- Box d—Establishment number
- You may use this box to identify separate establishments in your business. You may file a separate Form W-3, with Forms W-2, for each establishment even if they all have the same EIN; or you may use a single Form W-3 for all Forms W-2 of the same type.
- Box e—Employer identification number (EIN)
- Enter the 9-digit EIN assigned to you by the IRS. If you do not have an EIN when filing your Form W-3, enter “Applied For” in box e, not your social security number (SSN).
- Box f—Employer’s name
- Enter the same name as shown on your Forms.
- Box g—Employer’s address and ZIP code
- Enter your address.
- Box h—Other EIN used this year
- If you have used an EIN (including a prior owner’s EIN) on that is different from the EIN reported on Form W-3 in box e, enter the other EIN used. Agents generally report the employer’s EIN in box h.
- Box 1 – Wages, tips, other compensation
- Show the sum of all taxable wages, tips, and other compensation that you paid to your employee during the year.
- Box 2 – Federal income tax withheld
- Show the sum of all federal income tax withheld from the employee’s wages for the year.
- Box 3 – Social Security wages
- Show the sum of all wages paid (before payroll deductions) subject to employee social security tax but not including social security tips and allocated tips.
- Box 4 – Social Security tax withheld
- Show sum of all total employee social security tax withheld, including social security tax on tips.
- Box 5 – Medicare wages and tips
- Enter the sum of all Medicare wages and tips in box 5.
- Box 6 – Medicare tax withheld
- Enter the sum of all employee Medicare tax withheld.
- Box 7 – Social Security tips
- Enter the sum of all the tips that the employee reported to you even if you.
- Box 8 – Allocated tips
- If you operate a large food or beverage establishment, enter the sum of all the tips allocated to the employee.
- Box 9 – No longer used
- This box is no longer used
- Box 10 – Dependent care benefits
- Enter the sum of all dependent care benefits under a dependent care assistance program paid or incurred by you for your employee.
- Box 11 – Nonqualified plans
- Enter the total reported in box 11 on Forms W-2.
- Box 12a – Deferred compensation
- Enter the total of all amounts reported with codes D through H, S, Y, AA, BB, and EE in box 12 on Forms W-2. Do not enter a code.
- Box 12b – No longer used
- This box is no longer used
- Box 13 – Third Party Sick Pay
- Leave this box blank.
- Box 14 – Income tax withheld by payer of third-party sick pay
- Complete this box only if you are the employer and have employees who had federal income tax withheld on third-party payments of sick pay. Show the total income tax withheld by third-party payers on payments to all of your employees. Although this tax is included in the box 2 total, it must be separately shown here.
- Box 15 – State/Payer’s state no
- Enter the two-letter abbreviation for the name of the state or territory being reported on Form(s) W-2. Also enter your state- or territory-assigned ID number. If the Forms W-2 being submitted with this Form W-3 contain wage and income tax information from more than one state or territory, enter an “X” under “State” and do not enter any state or territory ID number.
- Box 16 – State wages, tips, etc.
- This box reports the total amount of taxable wages you earned in that state.
- Box 17 – State income tax withheld
- Enter the sum of the amount of state income taxes withheld from your paychecks for the wages.
- Box 18 – Local wages, tips, etc.
- Enter the sum of the amount of total amount of wages subject to local, city or other state income taxes.
- Box 19 – Local income tax withheld
- Enter the sum of the amount of total amount of taxes withheld from your paychecks for local, city, or other state income taxes.
Please see the state filing section for details.
Remember, not all boxes will be filled out on every W-3 form. Only the relevant boxes for the specific payments made will have amounts or indicators.
Can you correct a W-3?
Form W-3, “Transmittal of Wage and Tax Statements,” accompanies the W-2 forms when they’re sent to the Social Security Administration (SSA). If you discover an error in your submitted W-2 forms after they’ve been sent, you’ll generally correct the individual W-2s using Form W-2c, “Corrected Wage and Tax Statement.”
Here’s how the correction process generally works:
Correcting W-2 Forms
- If you find errors on the W-2 forms you’ve submitted, you’ll need to file Form W-2c to correct those errors. Each incorrect W-2 form will need a corresponding W-2c form.
W-3c for W-2c Forms
- When submitting W-2c forms to the SSA, you’ll also need to submit Form W-3c, “Transmittal of Corrected Wage and Tax Statements.” Form W-3c serves the same purpose as the W-3 but is used exclusively for corrected W-2c forms. It provides a summary of the W-2c forms being sent.