The importance of financial management

What is a w3? As a small business owner, financial management can often feel intimidating and overwhelming—especially when it comes to employee forms and documentation. That’s why we’re breaking down what the W-3 form is and how you can file it for your business.

What is a W-3 form?

So, what is a w3? The W-3 form, also known as the Transmittal of Wage and Tax Statements, is a summary of a company’s employee earnings and contributions for the preceding year that is sent to the Social Security Administration (SSA). 

In a nutshell, the W-3 form adds up all of the information that employers supply in a single document. Employer name, employer identification number, address, contact information, and other details are summarized on the form. 

The W-3 then totals all of the company’s personnel information, including:

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

The form, together with the related W-2 forms, must be filed with the SSA to verify that all wages for the previous year were reported and that all FICA (Federal Insurance Contributions Act) taxes were paid. When filing the W-3, no payment is sent.

What’s the difference between a W-3 form and a W-2 form?

The W-2 and W-3 forms have a lot in common. The key distinction is in the receiver. W-2 forms are copied from the employer to the employee, whereas employers send copies of the W-3 form to the SSA (along with additional copies of W-2s).

What do I need to complete a W-3 form?

To complete the W-3 form, you’ll need some common business information, such as your company’s legal name, Federal Employer Identification Number (FEIN or EIN), and postal address. 

You’ll also need your payroll records and W-2 forms. Payroll records, such as your payroll register and year-to-date payroll information, show employees’ gross earnings, taxes and deductions withheld, and net wages. If you’re using one of the best payroll software programs for small businesses, all this information should be right at your fingertips.

Cross-reference your W-2 form information with your payroll records for further verification rather than inserting information directly from the W-2. Before filling out the W-3 form, you can double-check that the information on W-2 is correct.

Because the W-3 form is an annual file, the IRS and the SSA require employers to complete and submit it once a year. The W-3 form (together with all corresponding W-2 forms) must be filed by January 31st each year.

How to fill out a W-3 form

Follow this process for filling out the W-3 form as a business owner. 

Because the W-3 form must be printed using special red ink, you won’t be able to duplicate or print it from home. You could be fined if you submit the form with noncompliant ink. 

Completing your W-2s

Before you start filling out your W-3, make sure you’ve completed the W-2 form for each of your employees. To complete the W-3 form, use the information on each W-2, such as your EIN number. 

W-2s are not sent to independent contractors; instead, they receive Form 1099-NEC. Only employees who completed a W-4 form during the onboarding process should receive a W-2, as a rule.

The lettered boxes on the W-3 assist the SSA in identifying your company. 

Box A: Control Number

This box can be used to arrange your internal records if you have more than 50 employees and file more than one W-3. On Form W-2, there is a spot to enter a matching control number. 

Many employers will select “941,” which refers to IRS Form 941. This is a quarterly tax return that most businesses file. If your company owes less than $1,000 in annual payroll taxes, you can file a “944” form.

Unless you work for a nonprofit, you’ll probably select “None applicable.” 

Box B: Kind of Payer

In this section you’ll see multiple options such as “military” and “944.” You’ll be able to determine which box you need to check depending on what you selected for “Box A.”

Box C: Total Number of W-2 Forms

Add up the number of W-2 forms you’re filing in Box C. Keep in mind that the total number of W-2s on a single W-3 form cannot exceed 50. 

Box D: Establishment Number 

Box D is used by businesses that file more than 50 W-2s to explain how they separated their personnel. This box can be ignored by most small firms. It’s most often used to identify separate business establishments for a company for tracking purposes.

Box E: Employer Identification Number

An employer identification number is required for each business with even one employee (EIN). Your EIN can be found on your W-2 form. 

Box F: Employer’s Name

This is simply the name of your company. 

Box G: Employer’s Address and Zip Code

This is the address of your company. 

Box H: Other EINs Used This Year

If your company has changed EINs this year, insert the old one here.

Boxes 1–19 all mirror a W-2. Add up each employee’s W-2 box-by-box and enter the total in the corresponding box on the W-3 form. Once you’re finished, you’re ready to file your W-3 form with the SSA. The W-3 and W-2 forms should be filed together.

FAQ

How do I get a copy of my W-3?

W-3 forms can be obtained from the IRS online ordering site or from the location where you received your paper copies of the W-2. 

Is a W-3 the same as a 941?

No. Employers are generally obligated to file Forms 941 quarterly. However, some small businesses (those with an annual responsibility of $1,000 or less for social security, Medicare, and withheld federal income taxes) may file Form 944 instead.

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