What is Form W-3?

As a small business owner, you're likely familiar with Form W-2. Now that you've hired your first employees, however, you've probably also seen the term “W-3 form”.

When it's tax time, the federal government requires organizations to submit a W-3 form for their employees. But what is this form, and how does it differ from W-2 forms?

In this article, we'll explain what a W-3 form is, how it differs from Form W-2, and how to complete it.

Takeaways from this blog post:

• Form W-3 summarizes an organization's wages and employee contributions for the tax year, which employers then send to the Social Security Administration.
• Businesses only need to complete one Form W-3 for all employees, unlike the individualized Form W-2 the IRS requires for each employee.
• Failing to file Form W-3 can result in hefty fines, so small business owners must stay on top of accurate record-keeping and timely submission to maintain financial wellness.

What are W-3 forms for?

A W-3 form, also known as the Transmittal of Wage and Tax Statements form, summarizes your organization's wages and employee contributions for the tax year. You'll send this form to the Social Security Administration (SSA) instead of the Internal Revenue Service (IRS).

The form allows you to report the following information:

• Wages, tips, and other compensation
• Federal income tax withheld
• Social Security wages
• Social Security tax withheld
• Medicare wages and tips
• Medicare tax withheld
• Social Security tips
• Allocated tips
• Dependent care benefits
• Nonqualified plans
• Deferred compensation
• State wages and tips
• State income tax withheld
• Local wages and tips
• Local income tax withheld

Unlike a Form W-2—which the IRS requires for each employee—your organization only needs to complete one Form W-3. That's because you'll add all the information for all employees' wages to the form, whereas you individualize W-2 forms for each employee.

Do you have to file a W-3 if you have no payroll?

You only need to file a W-3 if you have W-2 employees. Form W-3 only reports the information you put on your employees' W-2s to the SSA.

If you file a Form W-2, then you must file a W-3.

If any of the following situations apply to you, then you must file W-2 Forms for each eligible employee and a W-3 for your organization:

• You withheld any income, Social Security, or Medicare taxes from employee wages.
• You paid employees $600 or more in wages for the year, even if you didn't withhold any taxes.

Where can you get a W-3 form?

You can find W-3s on the IRS website. But your exact form depends on how you plan to file.

If you're filing online, you can use Business Services Online (BSO) or your payroll or tax software to complete a W-3 and send it electronically to the SSA. In many cases, BSO will automatically fill W-3 forms with information from your submitted Form W-2s. BSO is only available to organizations with fewer than 50 employees.

If you use tax preparers, they'll likely already have W-3 tax forms available online.

You can also file a paper form by mail, but you must be careful. Printing Form W-3 from the IRS website can come with a penalty, as the SSA can't scan those forms. Instead, you must order the red ink paper forms¹ from the IRS.

How do you fill out Form W-3?

Filling out Form W-3 is similar to the Form W-2 process for your employees. It uses the same information. However, it can be challenging for business owners to complete the first time.

We'll review each form field below and what you need to complete it.

Box a - Control number

Most organizations will skip Box a, or the control number. This is generally only used for organizations that want to assign a unique number to all of their related documents.

Box b - Kind of payer and kind of employer

In Box b, you'll tell the SSA which type of business you have. First, you must check which type of payer your organization is.

You have seven options:

• 941
  • Most organizations file Form 941 to remit business taxes
• Military
  • For military employers sending Form W-2s and W-3s to members of uniformed services
• 943
  • For agricultural employers who file Form 943
• 944
  • Organizations that file Form 944 are generally small businesses with fewer than $1,000 in annual liability for employment taxes
• CT-1
  • CT-1 is for railroad employers sending W-2s and W-3s for employees covered under the Railroad Retirement Tax Act (RRTA)
• Hshld. emp.
  • For household employers sending Forms W-2 and W-3 to household employees
• Medicare govt. emp.
  • For federal, state, and local government agencies submitting Form W-2s and W-3s for employees who are subject to only Medicare taxes

Most organizations fill out Form 941 to pay taxes, so you'll likely choose this one.

Next, you'll select the kind of employer that you are.

You have six options to choose from:

• 501c non-government
• State/local non-501c
• State/local 501c
• Federal government
• Third-party sick pay
• None apply

Unless your organization is a tax-exempt charitable organization, private foundation, local government, school district, or other publicly owned government entity, you'll select “none apply.”

Boxes c through h

In boxes c through h, you'll provide your business information, including the number of W-2 forms you submitted, your federal employer identification number (EIN), your organization's legal name, business address, and other EINs used during the tax year.

You should also provide a contact person, a phone number, and an email address at the bottom of the form so that the SSA or the IRS can contact you with any questions.

Boxes 1 through 11

Each box in sections 1 through 11 corresponds to the same boxes on your employees' W-2s. Simply add all this information and report the total amount for your organization. However, you'll skip section 9, as this is for SSA use only.

Box 12

In Box 12, you'll enter all the amounts for codes D through H, S, Y, AA, BB, and EE from your employees' W-2s. Skip codes A through C, J through R, T through W, Z, DD, FF, GG, and HH, as you won't need these for Form W-3.

Box 13

You'll leave this box blank, as it is only for third-party sick pay through Form 8922.

Box 14

If you have any employees who have their taxes withheld on third-party sick pay payments, you'll include this information in Box 14.

Box 15 through 19

In Box 15, you'll enter your state and your state tax/employer ID number. If you have employees in multiple states, enter an “X” instead of listing any state.

Now, enter any state tax information in Boxes 16 through 19.

Where do you send Form W-3?

If you're filing by mail, you should only send Form W-3 and Form W-2 Copy A in a flat envelope without folding the forms.

Send the form to the SSA at the mailing address below:

Social Security Administration

Direct Operations Center

Wilkes-Barre, PA 18769-0001

If you use certified mail, use ZIP Code 18769-0002 instead.

Don't send employment tax forms, cash, checks, or other payment methods to the SSA. You must send all payments and other forms to the IRS.

Like your Form W-2, Wage and Tax Statements, and Transmittal of Wage and Tax Statements, the annual deadline for filing your Form W-3 with the SSA is January 31.

What if you need to correct something on Form W-3?

If you made a mistake on your tax form W-3 or any W-2, you can submit Form W-3 C, also known as the Transmittal of Corrected Wage and Tax Statements form.

For any W-2 that's corrected, you'll submit Copy A of Form W-2c along with Form W-3 C to the SSA.

Send W-2 C and W-3 C via the U.S. Postal Service to:

Social Security Administration

Direct Operations Center

P.O. Box 3333

Wilkes-Barre, PA 18767-3333

For any other carrier, you'll send correction forms to:

Social Security Administration

Direct Operations Center

Attn: W-2c Process

1150 E. Mountain Drive

Wilkes-Barre, PA 18702-7997

What happens if you don't file Form W-3?

If you fail to file Form W-3, your business could take a hit financially.

"When businesses forgo filling this form, they risk hefty fines, starting from $50 for one late form to up to $550,000 in a year," said Mark Pierce, the CEO of Wyoming Trust & LLC².

As an experienced CPA and attorney, Pierce's work involves deciphering confusing tax elements for businesses. He suggests small business owners keep an accurate, well-organized payroll system to simplify the W-3 preparation process.

"Services like QuickBooks and Zoho Payroll automatically calculate these forms, making the process more efficient," said Pierce. "Remember, it’s about staying on top of the game, maintaining accurate records, and timely submission. Succeeding in filing compliance is an important part of financial wellness for businesses, and tools and services out there can make things manageable even for small businesses."

Conclusion

As a small business owner, tax season can feel overwhelming with all the different forms you need to fill out. It's important to understand Form W-3 for accurate reporting of employee wages and taxes to the IRS. If you have any employees for your small business, you must submit a Form W-3 to the SSA to summarize your W-2s. While it may seem like an intimidating process, completing this form will allow you to remain compliant and avoid any potential penalties.

PeopleKeep doesn’t provide tax or legal advice or tax services. If you need additional help, you should contact a tax professional, CPA, or other financial professional to help you fill out W-2 and W-3 Forms.

This article was originally published on August 17, 2022. It was last updated on July 11, 2024.

1. https://www.irs.gov/businesses/online-ordering-for-information-returns-and-employer-returns
2. https://wyomingllcattorney.com/