| Criteria | W-2 | W-3 |
| Purpose | The W-2 form is an annual report from an employer to employees, outlining the total earnings and withheld taxes throughout the year for each employee. It comprises various fields comprising details about your taxes, withholdings, and compensation. |
The W-3 form, also known as the Transmittal of Wage and Tax Statements, summarizes all the W-2 forms an employer sends to the IRS. Each W-3 form accompanies a batch of W-2s to affirm the total earnings paid and taxes withheld for the entire workforce. |
| Fields Included | The W-2 form includes fields such as employee's name, address, and Social Security number, employer's name, address, and identification number (EIN), wage, tips and other compensation, federal income tax withheld, social security wages, Medicare wages, and tips. Additional fields include allocated tips, dependent care benefits, nonqualified plans, and state and local income tax information. |
The W-3 form contains practically the same fields as the W-2 but is a summation for all employees. It includes wages, tips, other compensation, total federal income tax withheld, social security wages, Medicare wages and tips, allocated tips, dependent care benefits, nonqualified plans, and state and local income tax information. |
| Calculations | The W-2 form calculates the amount of taxes that have been taken out of the gross wages earned by the employee. This includes federal, state, and local income tax, social security tax, and Medicare tax. The employer bases these calculations on the information an employee provides in their W-4 form. |
Businesses use the W-3 form to total the data provided on the W-2 forms for all employees. This includes summing up the total wages paid and taxes withdrawn during the year. The W-3 form effectively provides a comprehensive outline of an employer's yearly payroll obligations. |
| Intended Recipients | The W-2 form is mainly for employees. Employers issue copies to each employee and the Social Security Administration, IRS, and state and local municipalities (if required). |
The W-3 form is essentially for the IRS and the Social Security Administration. An employer only needs to file the W-3 form when paper Copy A of Form(s) W-2, Wage, and Tax Statement is being filed. |
Remember, it is crucial to accurately complete and timely submit both the W-2 and W-3 forms as they are essential for tax administration and ensuring compliance with payroll tax obligations. For more detailed information or assistance, it would be advisable to consult with a tax professional or the IRS's official guidelines.
