Form W3

Form W-3, Transmittal of Wage and Tax Statements, is a summary form that basically serves as a cover page for Copy A, Form W-2. It includes totals of gross wages, federal income tax withholding, social security tax withholding and Medicare withholding for all employee W2 forms. Employer matching social security and Medicare taxes are not included on the W3.

Form W3 is sent to the Social Security Administration by February 28th of every year by employers, along with the the Red Copy A of form W2.  Then, the Social Security Administration enters the employee information in its computer data base and sends the W2 information to the Internal Revenue Service.

Once the IRS receives the W2 information, it compares the W3 totals for gross wages, social security and Medicare taxes to the employer's quarterly 941s for the same year.  If the W3 shows more gross wages than the total of the four quarterly Form 941s, the IRS writes to the employer and asks for an explanation. The IRS also checks for valid employee social security numbers

Form W3 can be downloaded from the IRS website, or by calling 1-800-829-3676.

Payroll, payroll taxes and workers compensation are facts of life for businesses with employees.  While employees may be absolutely critical to the success of your business, they consume valuable resources that increase your cost of doing business. Make a mistake in calculating payroll withholding taxes and/or paying payroll taxes and you have angry employees and the IRS to deal with.

As you proceed with your business planning, you would be wise to consider purchasing a payroll software program to help process your payroll. Take a look at our payroll software program page to get an idea what types of features and reporting capabilities are important before you buy.