Form W-3 Transmittal of Wage and Tax Statements (2010): A Complete Guide
What Form W-3 Is For
Form W-3 is a summary cover sheet that employers use to transmit all their employees' W-2 forms to the Social Security Administration (SSA). Think of it as a shipping label for all your W-2s—it accompanies the paper copies of every W-2 you issue to your employees and tells the SSA what to expect in the package. The W-3 includes totals from all your W-2s combined: total wages paid, total federal income tax withheld, total social security wages, total Medicare taxes, and other important summary information. IRS Form W-3 2010
Every employer who files a Form W-2 must also file a Form W-3, even if you're only submitting one W-2 (such as a household employer with a single employee). The W-3 helps the SSA and IRS match your employees' reported earnings with what they'll claim on their individual tax returns. It also ensures your employees receive proper Social Security and Medicare benefit credits. An authorized agent, service bureau, or payroll company may sign and file Form W-3 on your behalf if they have proper authorization, though you remain ultimately responsible for accurate and timely filing. IRS Instructions for Forms W-2 and W-3 2010
When You’d Use Form W-3
Standard Filing
You must file Form W-3 by February 28, 2011 if you're filing paper forms. If you file electronically, you get an automatic extension until March 31, 2011. Note that regardless of when you file with the SSA, you must still furnish W-2 copies to your employees by January 31, 2011.
Extension Requests
If you need more time to file Form W-3 with the SSA, you can request an automatic 30-day extension by filing Form 8809 (Application for Extension of Time To File Information Returns) before the February 28 deadline. This extension applies only to filing with the SSA—not to furnishing employee copies, which are still due January 31.
Amended/Corrected Returns
If you discover errors after filing your original Form W-3 and W-2s, you'll need to file Form W-3c (Transmittal of Corrected Wage and Tax Statements) along with corrected Forms W-2c. You must file a Form W-3c whenever you file any Form W-2c with the SSA, even if you're only correcting a single employee's name or Social Security number. However, if you discover an error on an employee's W-2 before sending it to the SSA, simply mark "Void" on Copy A of the incorrect form, prepare a new one, and write "CORRECTED" on the employee's copies (not on Copy A).
Business Termination
If you terminate your business during the year, you can file Forms W-2 and W-3 any time after ceasing operations, but no later than the last day of the month following the month you made final wage payments. IRS Instructions for Forms W-2 and W-3 2010
Key Rules or Details for 2010
HIRE Act Reporting
The 2010 form introduced new reporting requirements for the Hiring Incentives to Restore Employment (HIRE) Act. Employers who hired qualified employees between February 4, 2010 and December 31, 2010 could claim an exemption from the employer's share of Social Security tax. These HIRE-exempt wages had to be reported using code CC in box 12 of W-2 forms, with the total shown in box 12b on Form W-3. Box 12a on Form W-3 now reported total deferred compensation amounts (previously reported in box 12).
Military Differential Pay
New for 2010, differential wage payments made to employees on active military duty for more than 30 days became subject to income tax withholding (but not Social Security or Medicare taxes). These needed to be reported in box 1 of W-2s and properly reflected on your W-3 totals.
Electronic Filing Threshold
If you were required to file 250 or more Forms W-2, you had to file them electronically unless the IRS granted you a waiver using Form 8508. The IRS strongly encouraged electronic filing even for smaller employers. Electronic filers received the automatic March 31 deadline extension.
Form 944 Employers
If you filed Form 944 (Employer's ANNUAL Federal Tax Return) instead of quarterly Form 941s, you needed to check the "944" checkbox in box b of Form W-3. This helped the SSA reconcile your wage reporting with your annual tax return.
Do Not Staple
The SSA emphasized that you should never staple or tape Form W-3 to the W-2 forms or staple W-2s together—these forms are machine-read and staples interfere with processing. The forms should also be sent flat, not folded. IRS Instructions for Forms W-2 and W-3 2010
Step-by-Step (High Level)
Step 1: Complete All Employee W-2 Forms First
Before you can fill out Form W-3, you must complete Form W-2 for every employee who received wages from which you withheld income, Social Security, or Medicare tax, or who would have had income tax withheld if they'd claimed no more than one allowance.
Step 2: Calculate Form W-3 Totals
Add up the amounts from all your W-2 forms for each box. Box 1 on W-3 equals the total of all box 1 amounts from every W-2, box 2 on W-3 equals total box 2 amounts, and so on. Be careful with boxes 12a and 12b—these require adding specific code totals from box 12 of all W-2 forms.
Step 3: Complete W-3 Identification Information
Fill in your employer identification number (EIN), company name, address, and contact information. Select the appropriate "Kind of Payer" checkbox (941, 943, 944, CT-1, Military, or Hshld. emp.) based on which employment tax return you file. Enter the total number of W-2 forms you're transmitting.
Step 4: Organize Your W-2 Forms
Arrange all Copy A forms of your W-2s either alphabetically by employee last name or numerically by Social Security number. Don't mix different types of forms—if you file multiple kinds of employment tax returns, group W-2s accordingly with separate W-3 forms for each group.
Step 5: File With the SSA
Mail the entire Copy A page of all W-2s with the entire page of Form W-3 to: Social Security Administration Data Operations Center, Wilkes-Barre, PA 18769-0001 (or 18769-0002 for Certified Mail). If filing electronically, submit through the SSA's Business Services Online at www.socialsecurity.gov/employer by March 31, 2011. Electronic filers don't need to submit a paper W-3.
Step 6: Keep Records
Make a copy of Form W-3 and keep it with Copy D (For Employer) of all W-2 forms for at least 4 years. IRS Form W-3 2010
Common Mistakes and How to Avoid Them
Mistake #1: Mismatched EINs and Names
The most critical error is using different employer identification numbers (EINs) or employer names on your W-3, W-2s, and employment tax returns (Form 941, 943, 944, CT-1, or Schedule H). The SSA and IRS match these documents—any discrepancy triggers processing delays and potential penalties. Solution: Before filing, double-check that your EIN and legal business name match exactly across all forms.
Mistake #2: Incorrect Totals and Math Errors
Employers often rush the addition when totaling amounts from numerous W-2 forms, leading to incorrect W-3 totals. Even small errors can cause SSA rejection. Solution: Use payroll software that automatically calculates W-3 totals, or double-check your manual calculations. Verify that W-3 totals exactly match the sum of all corresponding W-2 boxes.
Mistake #3: Filing the Wrong Copy
Some employers accidentally send the SSA copies meant for employees or state agencies, or file forms printed from the IRS website (which are for informational purposes only and not machine-readable). Solution: Use only official IRS pre-printed forms or SSA-approved substitute forms that meet Publication 1141 specifications. Send only Copy A to the SSA.
Mistake #4: Forgetting Box 12 Codes on W-3
Form W-3 has specific boxes (12a for deferred compensation and 12b for HIRE exempt wages) that require totaling particular box 12 codes from all W-2 forms. Employers often overlook these. Solution: When calculating W-3 box 12a, total all deferred compensation codes from employee W-2s. For box 12b (new in 2010), total all code CC amounts for HIRE exempt wages.
Mistake #5: Stapling Forms Together
Despite clear instructions, many employers staple Form W-3 to their W-2 stack or staple W-2s together. The SSA uses automated scanning equipment—staples cause jams, tears, and processing errors. Solution: Use paper clips if needed during organization, but remove them before mailing. Place W-3 on top of the W-2 stack and mail flat without fasteners.
Mistake #6: Sending Payments With Forms
Some employers mistakenly include tax payment checks with their W-3 and W-2 submission to the SSA. The SSA doesn't process tax payments—that's the IRS's responsibility. Solution: Send employment tax payments separately to the IRS using EFTPS (Electronic Federal Tax Payment System) or mail to the IRS address listed on Form 941, 943, or 944—never to the SSA. IRS Instructions for Forms W-2 and W-3 2010
What Happens After You File
SSA Processing
Once the SSA receives your Form W-3 and accompanying W-2s, they scan and process the information to update each employee's Social Security earnings record. This data determines future Social Security and Medicare benefit eligibility and amounts. The SSA also shares wage data with the IRS for tax compliance purposes.
IRS Matching Program
The IRS receives your wage data from the SSA and matches it against employment tax returns you filed during 2010 (Forms 941, 943, 944, CT-1, or Schedule H). They verify that the wages and taxes reported on your W-2s and W-3 match what you reported quarterly or annually. Discrepancies trigger correspondence from the IRS requesting reconciliation.
Employee Tax Returns
Your employees use the W-2 copies you provided to prepare their individual income tax returns (Form 1040). The IRS computer systems match the W-2 wage and withholding information against what employees report. Mismatches can delay refunds or trigger audits.
Error Notifications
If the SSA finds problems with your submission—incorrect format, unreadable forms, missing information, or mismatched data—they'll send you an error notice explaining what needs correction. You'll need to file corrected Forms W-2c and W-3c promptly to avoid penalties.
Penalty Assessment
Late filing, failure to file, or filing incorrect information can result in penalties. For 2010, penalties ranged from $30 to $100 per form depending on how late you filed, with maximum penalties reaching $500,000 annually. If the IRS determines you intentionally disregarded filing requirements, penalties increase substantially. You may also owe penalties for failing to furnish correct W-2s to employees by January 31.
Record Retention
Keep your copy of Form W-3 and Copy D of all W-2s for at least 4 years after the due date or payment date of the tax (whichever is later). The IRS and SSA may request these records during audits or to resolve discrepancies. IRS Instructions for Forms W-2 and W-3 2010
FAQs
Q1: Can I file Form W-3 without any W-2 forms?
No. Form W-3 is strictly a transmittal form that accompanies W-2 forms. You should never file a W-3 by itself—it only serves to summarize and transmit the W-2s. If you file W-2s electronically through the SSA's Business Services Online, the system automatically generates the W-3 information, so you don't need to submit a separate paper W-3.
Q2: What if I have household employees—do I still need Form W-3?
Yes. Even if you only have one household employee, you must file Form W-3 if you're filing a paper Form W-2. Check the "Hshld. emp." box in section b of Form W-3. Household employers who file Schedule H (Form 1040) for employment taxes still need to follow the same W-2 and W-3 filing requirements as other employers.
Q3: Can I file multiple W-3 forms for the same tax year?
Yes, if you file different types of employment tax returns. For example, if you file both Form 941 (for regular employees) and Form 943 (for agricultural employees), you should prepare separate groups of W-2s with a separate W-3 for each type. Each W-3 should check the appropriate box in section b indicating which employment tax return it corresponds to.
Q4: What's the difference between box 12a and box 12b on Form W-3?
Box 12a reports the total of all nonqualified deferred compensation amounts from your employees' W-2 forms (previously just called "box 12" in earlier years). Box 12b is new for 2010 and specifically reports the total HIRE exempt wages and tips—wages paid to qualified employees hired under the Hiring Incentives to Restore Employment Act for which you claimed the payroll tax exemption. Add up all code CC amounts from box 12 of employee W-2s to get this total.
Q5: How do I correct Form W-3 if I made a mistake after filing?
File Form W-3c (Transmittal of Corrected Wage and Tax Statements) along with any corrected Forms W-2c. You must file a W-3c whenever you submit W-2c forms to the SSA, even if you're only correcting information for one employee. The W-3c recalculates the totals based on your corrections. If you haven't filed yet and discover the error, simply correct the form before mailing—don't send the incorrect version.
Q6: Is the February 28 deadline a postmark deadline or must the SSA receive it by then?
The February 28, 2011 deadline is when the SSA must receive your paper Form W-3 and W-2s—not just the postmark date. To meet the "furnish" requirement, however, forms mailed to employees are considered timely if properly addressed and mailed on or before January 31, 2011. For electronic filers, the SSA must receive your submission by March 31, 2011.
Q7: What if an employee's W-2 has the wrong address—do I need to file W-3c?
No. If only the address was wrong but all other W-2 information (wages, withholding, SSN, name) is correct, don't file W-3c or W-2c with the SSA. However, you must give the employee a corrected copy—either reissue a new W-2 marked "REISSUED STATEMENT," issue a W-2c showing the correct address, or remail the incorrect W-2 in an envelope with the correct address. Send nothing to the SSA for address-only corrections. IRS Instructions for Forms W-2 and W-3 2010
Additional Notes
This summary provides essential information about Form W-3 for 2010 in plain language, drawing exclusively from official IRS sources at IRS.gov. For complete details and specific situations not covered here, consult the full 2010 Instructions for Forms W-2 and W-3 or contact the IRS Information Reporting Customer Service at 1-866-455-7438.
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