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What is the difference between a W-2 and a W-3
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It's simple. Employees use the information provided by their employer on the form W-2
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to complete and file their personal income tax returns. And employers use form W-3 to report employee income
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to the IRS and Social Security Administration. So basically, your employers are going to file form W-3
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which then allows employees to file their W-2 with the IRS and state taxing authorities
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So what companies need to file a W-3 form? Every employer is required to file a W-2
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Must file a W-3. Which translates to most employers in the United States
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are going to be required to file a W-3 if they've paid an employee more than $600 in wages
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because that's the benchmark. The $600 in wages is the benchmark that triggers whether they need to file a W-2
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So if you're filing a W-2, you must file a W-3 as an employer
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Now, if you are going to file paper form W-3, you need to complete this only when filing paper copies
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of the W-2 wage and tax statement. Do not file this form, W-3, alone
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All paper forms, they must comply with the IRS standards and be machine readable
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Photocopies are not acceptable. And you're going to use a form W-3
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even if only one paper form W-2 is being filed. You're going to need to make sure that both the form W-3
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and the form W-2 show the correct tax year and the employer identification numbers
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You need to make a copy of this form and keep it with your records
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and the IRS recommends retaining these copies for at least four years
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In today's world of employers, most companies utilize payroll processing companies like the ADPs, the QuickBooks
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which typically are going to handle preparation of the W-2s and W-3s behind the scenes
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And you won't have to deal with any of that. But in the event your business is old school
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and you're manually processing payroll, you will be responsible for the preparation
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of your employee's W-2s and your filing of their subsequent W-3. You have one of two choices
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one of which is highly recommended to use and that's that online business service tool
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at the Social Security website where you can just complete the data through this form
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and follow the process through their online tool. But, in the event that you want to go manual
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you can go over here to the IRS form W-3 which is found on irs.gov
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and right here the instructions are even telling you go to SSA to file these together
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and don't waste your time with sending this in. But if you're going to do it, let's take a look at what you need to do
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So here's the information that you will need to file which is pretty much going to be in your payroll register
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all of this information should be. And if you're going to complete a paper form W-3
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you only prepare this form when you are filing a paper copy of the W-2
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You never file the W-3 alone. Now all paper forms must comply with IRS standards
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and be machine readable. Photo copies are not acceptable. You're going to use this form W-3
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even if only one W-2 is being filed. Make sure that both the W-3 and the W-2
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show the correct tax year and the employer identification number which is your EIN
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You need to make copies of this form and keep it for
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the IRS recommends at least four years. So if you're going to prepare a paper copy of the W-3
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this is what you're looking at. You're going to prepare and file that with the W-2 form together
