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General Instructions for Forms W-2 and W-3 - Introductory Material


Future Developments

For the latest information about developments related to Forms W-2 and W-3 and their instructions, such as legislation enacted after they were published, go to www.irs.gov/w2.

What's New

New due date for filing with SSA.   The due date for filing 2016 Forms W-2, W-2AS, W-2CM, W-2GU, W-2VI, W-3 and W-3SS with the SSA is now January 31, 2017, whether you file using paper forms or electronically.

Extensions of time to file.   Extensions of time to file Form W-2 with the SSA are no longer automatic. For filings due on or after January 1, 2017, you may request one 30-day extension to file Form W-2 by submitting a complete application on Form 8809, Application for Extension of Time to File Information Returns, including a detailed explanation of why you need additional time and signed under penalties of perjury. The IRS will only grant the extension in extraordinary circumstances or catastrophe. See Extension to file for more information. This does not affect extensions of time to furnish Forms W-2 to employees. See Extension of time to furnish Forms W-2 to employees for more information.

Penalties increased.   Higher penalties apply for:
  • Failure to file correct Forms W-2 by the due date,

  • Intentional disregard of filing requirements,

  • Failure to furnish Forms W-2, and

  • Intentional disregard of payee statement requirements.

The higher penalty amounts apply to returns required to be filed after December 31, 2015 and are indexed for inflation. See Penalties for more information.

New penalty safe harbor.   Forms W-2 with incorrect dollar amounts may fall under a new safe harbor for certain de minimis errors. See Penalties for more information.

Same-sex marriage.   For federal tax purposes, marriages of couples of the same sex are treated the same as marriages of couples of the opposite sex. The term “spouse” includes an individual married to a person of the same sex. However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that is not considered a marriage under state law are not considered married for federal tax purposes. For more information, see Revenue Ruling 2013-17, 2013-38 I.R.B. 201, available at https://www.irs.gov/irb/2013-38_IRB/ar07.html. Notice 2013-61 provides special administrative procedures for employers to make claims for refunds or adjustments of overpayments of social security and Medicare taxes with respect to certain same-sex spouse benefits before expiration of the period of limitations. Notice 2013-61, 2013-44 I.R.B. 432 is available at https://www.irs.gov/irb/2013-44_IRB/ar10.html.

Third-party sick pay recap reporting.   See Form 8922, Third-Party Sick Pay Recap.

Reminders

Get it done faster...  
E-file your Forms W-2 and W-2c with the SSA. See E-filing.

Rejected wage reports from the Social Security Administration (SSA).   The SSA will reject Form W-2 electronic and paper wage reports under the following conditions:
  • Medicare wages and tips are less than the sum of social security wages and social security tips,

  • Social security tax is greater than zero; social security wages and social security tips are equal to zero, and

  • Medicare tax is greater than zero; Medicare wages and tips are equal to zero.

  Additionally, Forms W-2 and W-2c electronic and paper wage reports for household employers will be rejected under the following conditions:
  • The sum of social security wages and social security tips is less than the minimum yearly earnings subject to social security and Medicare tax withholding for a household employee, and

  • The Medicare wages and tips are less than the minimum yearly earnings subject to social security and Medicare tax withholding for a household employee.

  If the above conditions occur in an electronic wage report, the SSA will notify the submitter by email or postal mail to correct the report and resubmit it to the SSA. If the above conditions occur in a paper wage report, the SSA will notify the employer by email or postal mail to correct the report and resubmit it to the SSA.

Note:

Do not write “corrected” or “amended” on any resubmitted reports.

  Household employers, see Pub. 926, Household Employer's Tax Guide.

Social security numbers.    Do not truncate social security numbers shown on Forms W-2, W-2AS, W-2GU, and W-2VI. Social security numbers are required on Forms W-2. See Taxpayer identification numbers, later. See also Regulations section 301.6109-(4)(b)(2).

  Filers of other forms, such as certain Forms 1099/1098, may truncate the social security number (XXX-XX-4567) to combat identity theft.

Limit on health flexible spending arrangement (FSA).   For 2016, a cafeteria plan may not allow an employee to request salary reduction contributions for a health FSA in excess of $2,550. The salary reduction contribution limitation of $2,550 does not include any amount (up to $500) carried over from a previous year. For more information, see Health flexible spending arrangement (FSA).

Additional Medicare Tax.   In addition to withholding Medicare tax at 1.45%, an employer is required to withhold a 0.9% Additional Medicare Tax on any Federal Insurance Contributions Act (FICA) wages or Railroad Retirement Tax Act (RRTA) compensation it pays to an employee in excess of $200,000 in a calendar year. An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages or compensation in excess of $200,000 to an employee and continue to withhold it until the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax. All wages and compensation that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold.

  For more information on Additional Medicare Tax, go to IRS.gov and enter “Additional Medicare Tax” in the search box.

  Unless otherwise noted, references to Medicare tax include Additional Medicare Tax.

Medicaid waiver payments.   Notice 2014-7 provides that certain Medicaid waiver payments are excludable from income for federal income tax purposes. See Notice 2014-7, 2014-4 I.R.B. 445 available at www.irs.gov/irb/2014-4_IRB/ar06.html. Also, see www.irs.gov/Individuals/Certain-Medicaid-Waiver-Payments-May-Be-Excludable-From-Income for questions and answers on the notice.

Business Services Online (BSO).    The SSA has enhanced its secure BSO website to make it easier to register and navigate. Use BSO’s online fill-in forms to create, save, and submit Forms W-2 and W-2c to the SSA electronically. BSO lets you print copies of these forms to file with state or local governments, distribute to your employees, and keep for your records. BSO generates Form W-3 automatically based on your Forms W-2. You also can use BSO to upload wage files to the SSA, check on the status of previously submitted wage reports, and take advantage of other convenient services for employers and businesses. Visit the SSA’s Employer W-2 Filing Instructions & Information website at www.socialsecurity.gov/employer for more information about using BSO to save time for your organization. Here you also will find forms and publications used for wage reporting, information about verifying employee social security numbers online, how to reach an SSA employer services representative for your region, and more.

Preview BSO by viewing a brief online tutorial. Go to www.socialsecurity.gov/employer and select “Business Services Online Tutorial” under “Handbooks, Tutorials & Videos.

Correcting wage reports.

You can use BSO to create, save, print, and submit Forms W-2c, Corrected Wage and Tax Statement, online for the current year as well as for prior years. After logging into BSO, navigate to the Electronic Wage Reporting home page and click on the “Forms W-2c/W-3c Online” tab. Also, see E-filing and E-filing Forms W-2c and W-3c.

Tax relief for victims of terrorist attacks.   Disability payments for injuries incurred as a direct result of a terrorist attack directed against the United States (or its allies) are not included in income. Because federal income tax withholding is only required when a payment is includable in income, no federal income tax should be withheld from these payments.

Distributions from governmental section 457(b) plans of state and local agencies.    Generally, report distributions from section 457(b) plans of state and local agencies on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. See Notice 2003-20 on page 894 of Internal Revenue Bulletin 2003-19 at www.irs.gov/pub/irs-irbs/irb03-19.pdf.

Earned income credit (EIC) notice (not applicable to Forms W-2AS, W-2CM, W-2GU, and W-2VI).    You must notify employees who have no income tax withheld that they may be able to claim an income tax refund because of the EIC. You can do this by using the official Internal Revenue Service (IRS) Form W-2 with the EIC notice on the back of Copy B or a substitute Form W-2 with the same statement. You must give your employee Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or your own statement that contains the same wording if (a) you use a substitute Form W-2 that does not contain the EIC notice, (b) you are not required to furnish Form W-2, or (c) you do not furnish a timely Form W-2 to your employee. For more information, see section 10 in Pub. 15 (Circular E), Employer's Tax Guide.

Electronic statements for employees.    Furnishing Copies B, C, and 2 of Forms W-2 to your employees electronically may save you time and effort. See Pub. 15-A, Employer's Supplemental Tax Guide, Furnishing Form W-2 to employees electronically, for additional information.

E-filing.    The SSA encourages all employers to e-file. E-filing can save you time and effort and helps ensure accuracy. You must e-file if you are required to file 250 or more Forms W-2 or W-2c. If you are required to e-file but fail to do so, you may incur a penalty.

January 31 due date for e-filers.

The due date for e-filing 2016 Form W-2 with the SSA is January 31, 2017.

Waiver from e-filing.

You can request a waiver from this requirement by filing Form 8508, Request for Waiver From Filing Information Returns Electronically. Submit Form 8508 to the IRS at least 45 days before the due date of Form W-2, or 45 days before you file your first Form W-2c. See Form 8508 for information about filing this form.

   The SSA’s BSO website makes e-filing easy by providing two ways to submit your Forms W-2 or W-2c Copy A and Forms W-3 or W-3c information.
  • If you need to file 50 or fewer Forms W-2 or 25 or fewer Forms W-2c at a time, you can use BSO to create them online. BSO guides you through the process of creating Forms W-2 or W-2c, saving and printing them, and submitting them to the SSA when you are ready. You do not have to wait until you have submitted Forms W-2 or W-2c to the SSA before printing copies for your employees. BSO generates Form W-3 or W-3c automatically based on your Forms W-2 or W-2c.

  • If you need to file more than 50 Forms W-2 or more than 25 Forms W-2c, BSO’s “file upload” feature might be the best e-filing method for your business or organization. To obtain file format specifications, visit the SSA’s Employer W-2 Filing Instructions & Information website at www.socialsecurity.gov/employer, select “Publications & Forms”, click on “Specifications for Filing Forms W-2 and W-2c Electronically (EFW2/EFW2C)”, and select the appropriate document. This information is also available by calling the SSA’s Employer Reporting Service Center at 1-800-772-6270 (toll free).

If you e-file, do not file the same returns using paper forms.

For more information about e-filing Forms W-2 or W-2c and a link to the BSO website, visit the SSA’s Employer W-2 Filing Instructions & Information website at www.socialsecurity.gov/employer.

In a few situations, reporting instructions vary depending on the filing method you choose. For example, you can include every type of box 12 amount in one employee wage record if you upload an electronic file. If you file on paper or create Forms W-2 online, you can include only four box 12 amounts per Form W-2. See the TIP for Box 12—Codes under Specific Instructions for Form W-2.

Form 944.    Use the “944” checkbox in box b of Form W-3 or Form W-3SS if you filed Form 944, Employer's ANNUAL Federal Tax Return. Also use the “944” checkbox if you filed Formulario 944(SP), the Spanish-language version of Form 944.

Forms W-2 for U.S. possessions.    In these instructions, reference to Forms W-2 and W-3 includes Forms W-2AS, W-2CM, W-2GU, W-2VI, and W-3SS, unless otherwise noted. These instructions are not applicable to wage and tax statements for Puerto Rico. Form W-2AS is used to report American Samoa wages paid by American Samoa employers, Form W-2CM is used to report the Commonwealth of the Northern Mariana Islands (CNMI) wages paid by CNMI employers, Form W-2GU is used to report Guam wages paid by Guam employers, and Form W-2VI is used to report U.S. Virgin Islands (USVI) wages paid by USVI employers. Do not use these forms to report wages subject to U.S. income tax withholding. Instead, use Form W-2 to show U.S. income tax withheld.

Treatment of military differential pay.    Employers paying their employees while they are on active duty in the United States uniformed services should treat these payments as wages subject to income tax withholding. See Military differential pay under Specific Instructions for Form W-2.

Military Spouses Residency Relief Act (MSRRA).   You may be required to report wages and taxes on a form different from the form you generally use if an employee claims residence or domicile under MSRRA in a different jurisdiction in one of the 50 states, the District of Columbia, American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands.

  Under MSRRA, the spouse of an active duty servicemember (civilian spouse) may keep his or her prior residence or domicile for tax purposes (tax residence) when accompanying the servicemember spouse, who is relocating under military orders, to a new military duty station in one of the 50 states, the District of Columbia, or a U.S. possession. Before relocating, both spouses must have had the same tax residence.

   For example, if a civilian spouse is working in Guam but properly claims tax residence in one of the 50 states under MSRRA, his or her income from services would not be taxable income for Guam tax purposes. Federal income taxes should be withheld and remitted to the IRS. State and local income taxes may need to be withheld and remitted to state and local tax authorities. You should consult with state, local, or U.S. possession tax authorities regarding your withholding obligations under MSRRA.

Nonqualified deferred compensation plans.   You are not required to complete box 12 with code Y (Deferrals under a section 409A nonqualified deferred compensation plan). Section 409A provides that all amounts deferred under a nonqualified deferred compensation (NQDC) plan for all tax years are includible in gross income unless certain requirements are satisfied. See Nonqualified deferred compensation plans under Special Reporting Situations for Form W-2 and the Nonqualified Deferred Compensation Reporting Example Chart.

  

Reporting aid charts.   To aid in reporting, a Form W-2 Box 13 Retirement Plan Checkbox Decision Chart and a Nonqualified Deferred Compensation Reporting Example Chart have been added to these instructions. See pages 28 and 29.

Reporting the cost of group health insurance coverage.    You must report the cost of employer-sponsored health coverage in box 12 using code DD. However, transitional relief applies to certain employers and certain types of plans. For more information, see Box 12—Codes for Code DD—Cost of employer-sponsored health coverage.

Severance payments.   Severance payments are wages subject to social security and Medicare taxes. As noted in section 15 of Pub. 15 (Circular E), severance payments are also subject to income tax withholding and FUTA tax.

Substitute forms.   You may use an acceptable substitute form instead of an official IRS form.

Form W-2.

If you are not using the official IRS form to furnish Form W-2 to employees or to file with the SSA, you may use an acceptable substitute form that complies with the rules in Pub. 1141, General Rules and Specifications for Substitute Forms W-2 and W-3. Pub. 1141 is a revenue procedure that explains the requirements for format and content of substitute Forms W-2 and W-3. Your substitute forms must comply with the requirements in Pub. 1141.

Pub. 1141 prohibits advertising on Form W-2. You must not include advertising on any copy of Form W-2, including coupons providing discounts on tax preparation services attached to the employee copies. See Pub. 1141 for further information.

Form W-2c.

If you are not using the official IRS form to furnish Form W-2c to employees or to file with the SSA, you may use an acceptable substitute form that complies with the rules in Pub. 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c. Pub. 1223 is a revenue procedure that explains the requirements for format and content of substitute Forms W-2c and W-3c. Your substitute forms must comply with the requirements in Pub. 1223.

Pub. 1223 prohibits advertising on Form W-2c. You must not include advertising on any copy of Form W-2c, including coupons providing discounts on tax preparation services attached to the employee copies. See Pub. 1223 for further information.

Need Help?

Help with e-filing.    If you have questions about how to register or use BSO, call 1-800-772-6270 (toll free) to speak with an employer reporting technician at the SSA. The hours of operation are Monday through Friday from 7:00 a.m. to 7:00 p.m. Eastern time. If you experience problems using any of the services within BSO, call 1-888-772-2970 (toll free) to speak with a systems operator in technical support at the SSA. To speak with the SSA's Employer Services Liaison Officer (ESLO) for the U.S. Virgin Islands, call 1-212-264-1462 (not a toll-free number). For Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa, call 1-510-970-8247 (not a toll-free number). For all other employers, contact the ESLO that services your region. For a complete telephone listing, visit the SSA’s Employer W-2 Filing Instructions & Information website at www.socialsecurity.gov/employer.

Information reporting customer service site.    The IRS operates a centralized customer service site to answer questions about reporting on Forms W-2, W-3, 1099, and other information returns. If you have questions about reporting on these forms, call 1-866-455-7438 (toll free).

TTY/TDD equipment.    Telephone help is available using TTY/TDD equipment for persons who are deaf, hard of hearing, or have a speech disability. If you have questions about reporting on information returns (Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, W-2, W-2G, and W-3), call 1-304-579-4827.

Employment tax information.    Detailed employment tax information is given in:
  • Pub. 15 (Circular E), Employer's Tax Guide,

  • Pub. 15-A, Employer's Supplemental Tax Guide,

  • Pub. 15-B, Employer's Tax Guide to Fringe Benefits,

  • Pub. 51 (Circular A), Agricultural Employer's Tax Guide, and

  • Pub. 80 (Circular SS), Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.

  You also can call the IRS with your employment tax questions at 1-800-829-4933 or visit IRS.gov and type “employment taxes” in the search box.

How To Get Forms and Publications

Internet.   You can access IRS.gov 24 hours a day, 7 days a week to:
  • Download, view, and order tax forms, instructions, and publications.

  • Access commercial tax preparation and e-file services.

  • Research your tax questions online.

  • See answers to frequently asked tax questions.

  • Search publications online by topic or keyword.

  • View Internal Revenue Bulletins published in the last few years.

  • Sign up to receive local and national tax news by email.

  You can order forms, instructions, and publications at www.irs.gov/orderforms. For any other tax information, go to www.irs.gov/uac/Tax-Law-Questions.

  
Do not print Copy A of Forms W-2, W-3, W-2c, or W-3c from IRS.gov and then file them with the SSA. The SSA accepts only e-filed reports and the official red-ink versions (or approved substitute versions) of these forms. For more information about acceptable substitute versions, see Substitute forms. For information about e-filing, see E-filing.

Mail.    You can send your order for forms, instructions, and publications to the following address. You should receive a response within 10 days after your request is received.

  

Internal Revenue Service 
1201 N. Mitsubishi Motorway 
Bloomington, IL 61705-6613

Free tax services.    To find out what services are available, get Pub. 910, IRS Guide to Free Tax Services. It contains lists of free tax information sources, including publications, services, and free tax education and assistance programs. Accessible versions of IRS published products are available on request in a variety of alternative formats.

Common Errors on Forms W-2

Forms W-2 provide information to your employees, the SSA, the IRS, and state and local governments. Avoid making the following errors, which cause processing delays. 
 
Do not:

  • Omit the decimal point and cents from entries.

  • Make entries using ink that is too light. Use only black ink.

  • Make entries that are too small or too large. Use 12-point Courier font, if possible.

  • Add dollar signs to the money-amount boxes. They have been removed from Copy A and are not required.

  • Inappropriately check the “Retirement plan” checkbox in box 13. See Retirement plan.

  • Misformat the employee's name in box e. Enter the employee's first name and middle initial in the first box, his or her surname in the second box, and his or her suffix (such as “Jr.”) in the third box (optional).

  • Cut, fold, or staple Copy A paper forms mailed to SSA.

  • Download Copy A of Forms W-2, W-2AS, W-2GU, W-2VI, W-3SS, or Form W-3 from IRS.gov and file with SSA.


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