What Is a W-3 Form? And Do I Have to File One?

You may have recently filed W-3 forms. What are they, and why do we need to file them?

Form-W3-Workest
Read up on how to understand W-3 forms and what resources to use when filing them.

Tax time is upon us, and businesses are working to compile their 2019 payroll data to submit to the IRS and the Social Security Administration. Filing the appropriate tax forms are one of the most important tasks an employer has in January of each year.

Employees look forward to receiving their W-2 forms and preparing their taxes for the previous year in the hopes of a refund from the IRS. Businesses know they must provide staffers with their W-2 forms by the annual deadline of January 31 of each year so they can get their own taxes prepared by the individual deadline of April 15. But in addition to providing staff members with their tax documentation, businesses must provide identifying information to the IRS at the same time.

The W-3 form and businesses

In addition to providing each employee with a W-2 form (1099 forms if you use independent contractors) by the required deadline, businesses must also file copies of each employee’s W-2 with the SSA, along with a W-3 form.

The W-3 form, officially the Transmittal of Wage and Tax Statements, is a summary for the SSA of all the business’ employee wages and contributions for the previous year. This summary document provides a quick overview of the W-2 forms that are attached and sent with the form every January.

The W-3 provides a way for the SSA to reconcile that all wages were reported for the previous year and all the necessary FICA (Federal Insurance Contributions Act) taxes have also been reported.

What’s included in a W-3 form?

The W-3 form essentially totals up all of the W-2 data that employers submit in an overview document. The form summarizes employer name, EIN (employer identification number), address, contact information, and other details.

The W-3 then provides a total of all the business’ employee information that includes:

  • Wages, tips, and other compensation
  • Allocated tips
  • Wages and tips subject to social security tax
  • Wages and tips subject to Medicare taxes
  • Federal income tax withheld
  • State income tax withheld
  • Social security tax withheld
  • Medicare tax withheld
  • Dependent care benefits
  • Deferred compensation
  • Nonqualified plans

Businesses need to only file the form with the SSA, along with the corresponding W-2 forms. No payment is sent when filing the W-3.

Timely filing of W-3 forms

Business owners or tax preparers must attach Copy A of each employee’s W-2 to the W-3 form and send it to the SSA no later than January 31 of the year for last year’s reporting. Those who miss the January 31 deadline can still file, but likely with penalties.

The W-2s and the W-3 forms submitted in 2020 summarize all employee earnings and payments for the full year 2019. Whether you file electronically or by mail, the January 31 deadline is the same.

This aligns with the deadline to provide employees a copy of their individual W-2 on January 31 of every year for the previous tax year. Employers should have W-2 forms prepared and sent to employees by the deadline, and send Copy A of each W-2, along with the W-3 summary document, on or before the 31st of January.

Employers may file W-2 and W-3 forms electronically through the SSA’s website. For businesses that want to file manually, copies of the form are available through the IRS website, but whether filing electronically or through the mail, submissions must be postmarked no later than the 31st of January.

For businesses filing more than 250 W-2 forms, the IRS requires the forms be submitted electronically unless they’ve provided the employer a written waiver. The IRS prefers employers file electronically and have a variety of resources available to help businesses file the forms online quickly and easily.

Help with W-3 forms

For small businesses that manage their own tax responsibilities, the form may seem challenging, but it’s simply a matter of adding up all the corresponding data that you’ll find on employee’s W-2 forms. The W-3 form mirrors the W-2 form, with sections 1 through 11 duplicating the necessary data, like wages, tips, and other compensation, federal income tax withheld, etc.

For companies that need more assistance, the SSA has a checklist that can help business owners complete and file their W-2 and W-3 forms. An IRS video can even walk you through the steps of reconciling your W-2 forms and the W-3 summary document.

Filing W-2 and W-3 forms every January is a beginning-of-the-year task that every business with employees must complete.

It may seem like an intimidating process, but with a bit of guidance and the right tools at your disposal, it can be easily and quickly accomplished.

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