General Instructions for Forms W-2 and W-3 for Employers and Payroll
Learn how employers accurately complete, file, and correct Forms W-2 and W-3 to meet IRS reporting requirements and ensure proper employee tax reporting.
Every year, employers report employee wages and taxes to the Social Security Administration (SSA) and the Internal Revenue Service (IRS). Forms W-2 and W-3 are central to this process, documenting employee earnings for tax purposes. Accurate reporting helps employees file personal income taxes and keeps businesses compliant with federal requirements.
Understanding these forms is necessary for managing payroll effectively. Mistakes can lead to penalties or processing delays. This guide covers the essentials of Forms W-2 and W-3, including who must file them and how to correct errors.
Who Is Required to Complete These Forms
Employers engaged in a trade or business who pay remuneration for services performed by an employee generally must file Form W-2, Wage and Tax Statement.1Internal Revenue Service. General Instructions for Forms W-2 and W-3 This requirement applies if income, Social Security, or Medicare tax was withheld during the year. Filing is also necessary if income tax would have been withheld if the employee claimed only one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee’s Withholding Certificate.
This responsibility covers various employers, including private businesses, non-profit organizations, and government entities. The determining factor is typically the entity with the right to direct and control the worker. Household employers must also file Form W-2 for any household employee paid cash wages meeting the annual Social Security and Medicare threshold ($2,800 for 2025, subject to change) or if federal income tax was withheld.2Internal Revenue Service. Topic No. 756, Employment Taxes for Household Employees Any employer required to file one or more Forms W-2 must also file Form W-3, Transmittal of Wage and Tax Statements, to send Copy A of the W-2s to the SSA, unless filing electronically.3Internal Revenue Service. Topic No. 752, Filing Forms W-2 and W-3
Differences Between Forms W-2 and W-3
Form W-2 and Form W-3 serve distinct functions in annual wage reporting. Form W-2 is an individual statement prepared for each employee, detailing their specific gross wages, tips, other compensation, and withheld taxes (federal income, Social Security, Medicare) for the calendar year.4Internal Revenue Service. About Form W-2, Wage and Tax Statement Employers provide copies to employees for their tax returns and records.
Form W-3 acts as a summary and transmittal document filed by the employer with the SSA when submitting paper copies of Form W-2. It reports the aggregate totals for all employees included in the W-2 batch, such as total gross wages and total taxes withheld. The SSA uses Form W-3 to verify that the sum of the individual W-2s matches the employer’s reported totals. When employers file electronically, the system often generates the equivalent W-3 summary data automatically.
Essential Information to Report
Accurately completing Forms W-2 requires specific information for each employee to ensure correct reporting to individuals and government agencies.
Employee Data
Each Form W-2 must include the employee’s full name as it appears on their Social Security card and their current mailing address. The employee’s Social Security Number (SSN) must be accurately entered in Box a. Employers can use the SSA’s online Social Security Number Verification Service (SSNVS) to help ensure names and SSNs match SSA records, which aids in the proper crediting of earnings for future benefits.5Social Security Administration. Employer W-2 Filing Instructions & Information
Wage Details
Compensation details are reported in specific boxes. Box 1 shows total taxable wages, tips, and other compensation subject to federal income tax. This amount may differ from Box 3 (Social Security wages) and Box 5 (Medicare wages and tips) due to certain pre-tax deductions. Box 3 is subject to an annual wage base limit ($168,600 for 2024), while Box 5 has no limit.6Internal Revenue Service. General Instructions for Forms W-2 and W-3 Box 12 uses codes to report various other compensation and benefits, like 401(k) deferrals (Code D) or employer-sponsored health coverage costs (Code DD).
Tax Withheld
Reporting withheld taxes accurately is also necessary. Box 2 shows total federal income tax withheld, based on the employee’s Form W-4 and IRS withholding tables (Publication 15-T). Box 4 reports employee Social Security tax withheld (6.2% of Box 3 wages, up to the limit). Box 6 shows employee Medicare tax withheld (1.45% of Box 5 wages), plus any Additional Medicare Tax (0.9% on wages over $200,000). State income tax withheld appears in Box 17, and local income tax withheld in Box 19.
Filing Procedures
Employers must file Copy A of all Forms W-2, along with Form W-3, with the SSA by January 31st of the year following the calendar year covered.7Internal Revenue Service. IRS Reminds Employers of January 31 Deadline for Form W-2, Other Wage Statements Copies B, C, and 2 of Form W-2 must be furnished to employees by the same date. If January 31st falls on a weekend or holiday, the deadline moves to the next business day.
Electronic filing is mandatory for employers filing 10 or more information returns (including Forms W-2, 1099, etc.) in aggregate during the year. The SSA’s Business Services Online (BSO) portal is the primary platform for e-filing, allowing direct data entry or file uploads (EFW2 format). Employers should register for BSO well before the deadline. E-filing through BSO automatically generates the necessary W-3 summary data.
Paper filing is an option only for employers filing fewer than 10 W-2s who are not otherwise required to e-file. This method requires submitting the official red-ink Copy A of each Form W-2 and the red-ink Form W-3 to the SSA’s designated address (currently Wilkes-Barre, PA). Photocopies are not acceptable.
Employers must also meet state filing requirements. Most states with income tax require W-2 information submission, often by the federal January 31st deadline, though rules vary. Many states mandate electronic filing and may require a state-specific reconciliation form. Employers should consult each relevant state tax agency for specific procedures, formats, and deadlines.
Handling Corrections
Errors discovered on Forms W-2 already filed with the SSA must be corrected using Form W-2c, Corrected Wage and Tax Statement.8Social Security Administration. Helpful Hints to Forms W-2c/W-3c Filing This form amends inaccuracies like incorrect names, SSNs, or monetary amounts. Corrections should be made promptly upon discovery.
When completing Form W-2c for monetary errors, enter the figure originally reported in the “Previously reported” column and the accurate figure in the “Correct information” column. For non-monetary corrections like name or SSN, use the designated boxes to show both the incorrect and correct information.
Form W-3c, Transmittal of Corrected Wage and Tax Statements, must accompany paper copies of Form W-2c sent to the SSA. It summarizes the corrections from the attached W-2c forms, showing aggregate totals for both “Previously reported” and “Correct information” amounts. A W-3c is required whenever filing paper W-2c forms, even if only correcting a name or SSN.
Employers must provide copies of Form W-2c to affected employees so they have accurate information for their tax returns.9Internal Revenue Service. If You Don’t Get a W-2 or Your W-2 Is Wrong Specific procedures apply for correcting errors involving the Employer Identification Number (EIN) or tax year, or if the original W-2 had a blank name and SSN; employers facing these situations should consult SSA guidance.