Form w3 – Transmittal of Wage and Tax Statements

Form W-3 is an essential IRS and Social Security Administration (SSA) form used by employers to transmit a summary of all Forms W-2 they issue for a given tax year. It acts as a cover sheet that reports aggregate totals of wages paid, Social Security and Medicare wages, and taxes withheld for all employees. The SSA uses Form W-3 to cross-check and process the wage and tax information reported by employers. Understanding the terminology related to Form W-3 is critical for payroll professionals, accountants, and employers to ensure proper compliance with federal regulations.

Business Services Online (BSO)

BSO is the Social Security Administration’s online portal that allows employers to electronically submit Forms W-2, W-3, W-2c, and W-3c. It provides tools for creating, filing, saving, and correcting wage reports. The platform automatically generates Form W-3 based on submitted Forms W-2, which reduces manual errors. BSO simplifies the filing process, especially for employers filing numerous forms, and is the preferred method for many businesses.

Copy A of Form W-2

Copy A is the official IRS and SSA copy of Form W-2 that employers must submit to the Social Security Administration. It is typically printed on special red-ink paper designed to be machine-readable, or filed electronically via the BSO portal or approved software. Copy A must be submitted alongside Form W-3, which transmits the summary totals for all Copy A forms filed. This copy is not provided to employees.

Corrected Wage and Tax Statement (Form W-2c)

Form W-2c is used to correct errors on previously submitted Forms W-2. Common corrections include changes to wages, Social Security or Medicare wages, tax withholdings, or employee identification information. When corrections are submitted, employers must use Form W-3c as the transmittal document, replacing the original Form W-3 for those corrections. Timely submission of corrections is necessary to avoid penalties.

Employer Identification Number (EIN)

The Employer Identification Number is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify businesses for tax reporting purposes. It must be included on all Forms W-2 and W-3 filed by the employer. The EIN must be accurate and complete; it cannot be abbreviated or truncated. The SSA uses the EIN to link wage reports to the correct employer record.

Extension of Time to File

Employers who require more time to prepare and file their Forms W-2 and W-3 may request an extension of time. This extension is requested using Form 8809, Application for Extension of Time To File Information Returns. Extensions are granted only for valid reasons, such as natural disasters or severe business disruptions. It is important to note that an extension to file with the SSA does not extend the deadline for furnishing Forms W-2 to employees.

Form 15397

Form 15397 is used to request an extension of time specifically to furnish Forms W-2 to employees. This form does not extend the filing deadline with the SSA. Employers who cannot meet the January 31 deadline to provide employee copies of Form W-2 may file Form 15397 with the SSA to request additional time.

Form 8809

Form 8809 is the official IRS form employers use to request an extension of time to file their information returns, including Forms W-2 and W-3, with the SSA. The form must be filed before the original due date to be considered. Extensions are granted only under exceptional circumstances and do not grant extensions for employee distribution deadlines.

Form W-3c

Form W-3c is the corrected transmittal form used when submitting corrected wage reports via Forms W-2c. This form summarizes the total corrections and replaces the original Form W-3 for those corrected returns. It must accompany all corrected Forms W-2c submitted to the SSA.

Medicare Wages and Tips

Medicare wages and tips are amounts subject to Medicare tax withholding. Unlike Social Security wages, there is no maximum limit on Medicare wages for tax purposes. These amounts are reported on Forms W-2 in boxes 5 and 7, respectively, and aggregated on Form W-3. The Medicare tax rate is 1.45% for both employers and employees, with an additional 0.9% surtax applied on employee wages exceeding the threshold.

Medicaid Waiver Payments

Certain payments received under Medicaid waiver programs are excluded from gross income for federal tax purposes. These payments are reported in box 12 of Form W-2 using code II but are not included in taxable wages reported in box 1. While these payments affect employee income reporting, they are accounted for separately in wage summaries.

Minimum Earnings Threshold for Household Employees

Household employers must report wages and withhold taxes if wages exceed a certain annual threshold set by the IRS. If wages paid to household employees are below this amount, Social Security and Medicare taxes may not be required, and the SSA may reject Forms W-2 and W-3 reporting these wages. Employers should consult IRS guidelines for current thresholds.

Social Security Number (SSN) Truncation

Employers may truncate the first five digits of an employee’s SSN on copies of Form W-2 provided to the employee to protect personal information. The truncated SSN replaces digits with characters like asterisks or Xs. However, SSNs on Copy A submitted to the SSA or on corrected Forms W-2c may never be truncated. Employer EINs must always be fully displayed on all forms.

Social Security Wages and Tips

Social Security wages and tips represent the portion of an employee’s earnings subject to Social Security tax, which has a maximum wage base limit each year. These amounts are reported on Forms W-2 in boxes 3 and 7 and summarized on Form W-3. Accurate reporting is crucial for employees to receive correct Social Security credits and benefits.

Taxpayer Identification Numbers (TINs)

TINs identify taxpayers and can be Social Security Numbers for individuals or Employer Identification Numbers for businesses. Employers must ensure TINs on all Forms W-2 and W-3 are correct to avoid processing delays or rejection by the SSA.

Wage Reporting

Wage reporting involves documenting employee earnings and withheld taxes accurately and submitting this information to the SSA and IRS using Forms W-2 and W-3. Proper wage reporting is fundamental to employee tax withholding, social security credits, and compliance with federal laws.

Wage and Tax Statement (Form W-2)

Form W-2 reports annual wages and tax withholding information for individual employees. Employers issue one Form W-2 per employee and submit Copy A with the transmittal Form W-3 to the SSA. Employees use Forms W-2 for their federal and state income tax returns.

Wage Threshold for Reporting

The IRS sets minimum wage thresholds that determine when wages must be reported on Forms W-2 and W-3. These thresholds ensure that only reportable compensation subject to withholding is included in filings.

Year-to-Date Totals

Year-to-date totals summarize cumulative wages, tips, and tax withholdings for the entire calendar year. Form W-3 reports these totals, including federal income tax withheld, Social Security and Medicare wages and taxes withheld, to the SSA.

Summary

Form W-3 is a critical document that accompanies all Forms W-2 submitted by employers. It summarizes the total wages and taxes withheld for all employees and ensures the SSA receives accurate and complete wage reports. Compliance with Form W-3 filing requirements, including timely submissions, accurate EINs and SSNs, and proper corrections, helps maintain smooth processing of wage data and avoids penalties. Understanding the related terminology