If you have paid employees, you must prepare IRS payroll tax forms W-2 and W-3 each year.
Your form W-2 tells the IRS, the Social Security Administration, and the employee the amount of wages and withholding for the year.
The transmittal form W-3 is the cover page for all the W-2s that will be submitted to the Social Security Administration.
It summarizes the total wages and withholdings included on all the W-2s.
The IRS payroll tax form W-2 has at least three copies. Copy A has preprinted red boxes and must be submitted to the Social Security Administration along with the W-3.
Copies B and C have preprinted black boxes and are given to the employee.
*Notice: You cannot download a usable W-2 from the web! See the notice at the bottom of the page for instructions.
Your small business should also keep a copy of each W-2s for its records.
When preparing the W-3, it is very important that the totals on the W-3 match the sums of totals on the four Quarterly 941 Forms.
The W-2s themselves are relatively easy to fill out. See this Anatomy of a W-2 for explanations of what should go in each box.
Notice that your small business does not, send a copy of the form W-2 and W-3 to the IRS. Instead, the Social Security Administration shares the W-2 and W-3 information with the IRS. So...your business does not have to send copies to both agencies.
You can also file your W-2s and W-3 electronically with the Social Security Administration.
They have a free electronic filing option available that allows you to prepare and submit your W-2s and W-3. The due date for the electronic submission is the end of January as well