📤 Form W-3: The $310 Penalty Guide to W-2 Transmittal & 2025 Mandatory E-Filing Rule
Issuing Form W-2 to employees is only half of the employer’s reporting responsibility.
To complete the submission, the Social Security Administration also requires Form W-3 — a transmittal that summarizes all wages, taxes, and compensation reported on employee W-2s.
Many small businesses, ministries, household employers, and new startups overlook Form W-3, which can lead to SSA rejections, mismatched payroll records, and IRS penalties.
1️⃣ What Exactly Is Form W-3?
Form W-3 is the transmittal summary that accompanies all Forms W-2 sent to the Social Security Administration (SSA).
While employees only receive their individual W-2 copies, the SSA uses Form W-3 to verify that:
- Total wages across all W-2s match employer payroll records
- Federal withholding amounts are correctly aggregated
- Social Security and Medicare wages/taxes reconcile
- Additional items (tips, dependent care benefits, etc.) match the combined totals
Put simply: every employer who issues W-2s must also file a W-3.
2️⃣ Who Must File Form W-3?
The W-3 filing requirement applies broadly. You must file Form W-3 if you issue at least one Form W-2, regardless of business type:
- Corporations, LLCs, partnerships
- Churches and nonprofit organizations
- Household employers (nannies, domestic workers)
- Sole proprietors with part-time or full-time staff
Even if a payroll company prepares the forms, the employer is ultimately responsible for ensuring the W-3 is submitted.
3️⃣ Filing Deadline & 2025 Mandatory E-Filing Rule
The deadline for submitting Forms W-2 and W-3 to the SSA is January 31, 2026.
This deadline applies nationwide, and late filings can trigger significant IRS penalties.
Updated 2025 e-file requirement — “10 Returns” Rule:
- Employers must file electronically if they submit 10 or more information returns in total.
- This includes all types of returns: W-2, 1099, 1095, 5498, etc.
- The forms are counted in the aggregate — not separately by category.
- Example: 4 W-2s + 6 Forms 1099-NEC = 10 total returns → e-filing required.
Employers must submit W-2/W-3 through the SSA’s Business Services Online (BSO) system.
New filers must create a BSO account before uploading files.
4️⃣ Understanding Key Boxes on Form W-3
Below are the most important sections employers must complete accurately:
- Box a — EIN: Employer Identification Number
- Box 1: Total wages, tips, and other compensation
- Box 2: Total federal income tax withheld
- Boxes 3 & 5: Social Security and Medicare wages
- Boxes 4 & 6: Corresponding SS/Medicare taxes withheld
- Box 13: Dependent care benefits (if applicable)
- Boxes 16–20: State and local wage/tax totals
The SSA automatically checks for perfect alignment between the totals on W-2s and the totals listed on Form W-3.
5️⃣ Example — How W-3 Totals Are Calculated
Employee A wages: $39,000
Employee B wages: $26,500
Federal income tax withheld (combined): $5,480
Social Security wages: $65,500
Social Security tax withheld: $4,061
Medicare wages: $65,500
Medicare tax withheld: $949
👉 Form W-3 would show:
• Box 1 — $65,500
• Box 2 — $5,480
• Box 3 — $65,500
• Box 4 — $4,061
• Box 5 — $65,500
• Box 6 — $949
Essential principle: The totals must match the combined data on all W-2 forms — even a $1 discrepancy triggers SSA rejection.
6️⃣ EA Tax Tips for Accurate Filing
1) Reconcile year-end payroll reports before preparing W-2s and W-3.
2) Confirm that Social Security and Medicare totals align with your Form 941 filings.
3) Ensure your EIN is consistent across payroll filings, deposits, and W-3.
4) Churches and nonprofits must file W-3 if they pay any employee — no exceptions.
5) Upload early: BSO logins often lock or require re-verification late in January.
6) IRS penalties for incorrect or late filings can reach $310 per form depending on how long the error persists.