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Wage and Tax Statement; Statement of Corrected Income and Tax Amounts


Purpose of Form / Who Must File

Employers must file Form W-2 for each employee from whom income, social security, or Medicare taxes have been withheld. You must also file Form W-2 for each employee from whom income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4 (Employee's Withholding Allowance Certificate).

File Form W-2c to report corrections to amounts previously reported on Form W-2.

Form W-2 must show both the amount of income tax and the amount of social security and Medicare taxes withheld from the employee. Form W-2 is also used to report all wages, tips, and other compensation paid to an employee. Other compensation means amounts includible in gross income and applies to both cash and non-cash payments.

Payroll systems that have difficulty combining other compensation with wages and tips may file two Forms W-2. One can show wages and tips while the other can show the other compensation.

Special Reporting Situations

Moving Expense Reimbursements - Report reimbursements (including payments made directly to a third party and services furnished in kind) of an employee's moving expenses:

(1) Exclude qualified moving expense reimbursements (reimbursements for moving expenses incurred after 1993 that would have been deductible by the employee if he had paid them but were not deducted by the employee in a prior year) from wages and report in box 13.

(2) Include other moving expense reimbursements in wages and withhold income, social security, and Medicare taxes.

Employer Paid Taxes - If you paid your employee's share of social security, Medicare, or state unemployment compensation taxes rather than deducting it from wages, you must include the amount as wages, social security wages, and Medicare wages.

Deceased Employee's Wages - If an employee dies during the year, you; must report the accrued wages, vacation pay, and other compensation paid after the date of death. If you made the payment in the same year the employee died, you must withhold social security and Medicare taxes on the payment and report them on Form W-2. If you made the payment after the year of death, do not report it on Form W-2 and do not withhold social security and Medicare taxes.

You must also report the payment, whether made in the year of death or after the year of death, to the estate or beneficiary on Form 1099-MISC (Miscellaneous Income).

Employee Business Expense Reimbursements - Report reimbursements of an employee's business expenses:

  1. Exclude from wages, and do not report, payments made under an accountable plan. If, however, you pay a per diem or mileage allowance, and the amount paid exceeds the amount treated as substantiated under IRS rules, you must report the excess as wages and withhold income, social security, and Medicare taxes.
  2. Include payments made under a non-accountable plan in wages and withhold income, social security, and Medicare taxes.

Group Term Life Insurance - If you paid for group term life insurance in excess of $50,000 for an employee or former employee, you must report the amount determined by using the table in Publication 937.

Sick Pay - If you had employees who received sick pay from an insurance company or other third party payer, you may be required to report that information. See Publication 952 for specific instructions.

Fringe Benefits - Include all taxable fringe benefits as wages in box 1 and show the total value of fringe benefits in box 12.

Magnetic Media / Electronic Reporting

If you are required to file 250 or more information returns, you must file on magnetic media. Use Form 6559 (Transmitter Report and Summary of Magnetic Media), instead of Form W-3, to transmit magnetic media information returns.

Penalties

Penalties apply if you fail to file information returns in a timely manner, if you fail to include all information required to be shown on a return, or if you include incorrect information on a return. Penalties also apply if you file on paper when you were required to file on magnetic media, if you report an incorrect taxpayer identification number, if you fail to report a taxpayer identification number, or if you file to file paper forms that are machine readable.

When to File

Provide recipients with copies B and C of Forms W-2 by January 31 of the following year.

Where to File Form W-2 and W-2c

Transmittal of Wage and Tax Statements; Transmittal of Corrected Income and Tax Statements

Purpose of Form / Who Must File

Employers and other payers file Form W-3 to transmit copies A of paper Forms W-2 to the Social Security Administration.

Employers and other payers file Form W-3c to transmit copies A of paper Forms W-2c to the Social Security Administration.

Magnetic Media / Electronic Reporting

If you are required to file 250 or more information returns, you must file on magnetic media. Use Form 6559 (Transmitter Report and Summary of Magnetic Media), instead of Form W-3, to transmit magnetic media information returns.

When to File

File Form W-3 with copies A of Forms W-2 by February 28 of the following year.

Where to File Form W-3 and W-3c


 
TAX TIDBIT ...To correctly calculate withholding near wage base limits, enter your Gross Salary Year-to-date. It's important for an accurate calculation and is usually found on your last pay stub.