Items To Note

Distributions from section 457 plans of state and local agencies.    Generally, report distributions after December 31, 2001 from section 457 plans of state and local agencies on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. IRS plans to issue an update of Notice 2000-38, 2000-2 C.B. 174, that will provide further guidance for reporting distributions from governmental section 457 plans.

Electronic payee statements.   If your employees give their consent, you may be able to furnish Copies B, C, and 2 of Forms W-2 to your employees electronically. See Pub. 15-A for additional information.

Extended due date for electronic filers.   If you file your 2002 Forms W-2 with the Social Security Administration (SSA) electronically (not by magnetic media), the due date is extended to March 31, 2003. For information on how to file electronically, call the SSA at 1-800-772-6270.

Online filing of Forms W-2 and W-3.   You may file a limited number of Forms W-2 and W-3 online using the SSA Web Site at www.ssa.gov/employer. The site also allows you to print out copies of the forms for filing with state or local governments, distribution to your employees, and for your records.

Eliminating Code Q for box 12.   Recent legislation has eliminated the use of Code Q for box 12.

Reporting Code V for box 12.   Report income from your employee's exercise of nonstatutory stock option(s) in box 12 using code V. (Use of this code is optional for 2002.) See Code V - Income from the exercise of nonstatutory stock option(s) on page 9.

Substitute forms.   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 Private Printing of Substitute Forms W-2 and W-3. Pub. 1141, which is revised annually, 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.

Need Help?

Information reporting call site.   The IRS operates a centralized call 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), Monday through Friday, 8:30 a.m. to 4:30 p.m. Eastern time. If you have questions about magnetic media (or electronic) filing of Forms W-2, contact the SSA at 1-800-772-6270 or visit the SSA Web Site at www.ssa.gov/employer. See also Magnetic media/electronic reporting on page 2.

Help for people with disabilities.   Telephone help is available using TTY/TDD equipment. If you have questions about reporting on information returns - Forms 1096, 1098, 1099, 5498, W-2, W-2G, and W-3, you may call 304-267-3367. For other tax information, call 1-800-829-4059.

Online Wage Reporting Service.   Using a personal computer and a modem, you can get information from the SSA's Online Wage Reporting Service (OWRS). You can access OWRS by visiting the SSA Web Site at www.ssa.gov/employer. Call the SSA at 1-888-772-2970 if you experience problems using OWRS.

Information available includes magnetic media filing information, some IRS and SSA publications, information on electronic filing, and general topics of interest about annual wage reporting. You can also use OWRS to ask questions about magnetic media or electronic filing programs and reporting on Forms W-2 and W-3.

Employment tax publications.   Detailed employment tax information is given in:

• Circular A, Agricultural Employer's Tax Guide (Pub. 51),
• Circular E, Employer's Tax Guide (Pub. 15),
• Pub. 15-A, Employer's Supplemental Tax Guide, and
• Pub. 15-B, Employer's Guide to Fringe Benefits.

How To Get Forms and Publications

Personal computer.   You can access the IRS Web Site 24 hours a day, 7 days a week at www.irs.gov to:

• Download forms, instructions, and publications.
• See answers to frequently asked tax questions.
• Search publications on-line by topic or keyword.
• Send us comments or request help via e-mail.
• Sign up to receive local and national tax news by e-mail.

You can also reach the IRS using file transfer protocol at ftp.irs.gov.

CD-ROM.   Order Pub. 1796, Federal Tax Products on CD-ROM, and get:

• Current year forms, instructions, and publications.
• Prior year forms, instructions, and publications.
• Popular tax forms that may be filled in electronically, printed out for submission, and saved for recordkeeping.
• The Internal Revenue Bulletin.

Buy the CD-ROM on the Internet at www.irs.gov/cdorders from the National Technical Information Service (NTIS) or call 1-877-CDFORMS (1-877-233-6767) toll free.

By phone and in person.   You can order forms and publications 24 hours a day, 7 days a week, by calling 1-800-TAX-FORM (1-800-829-3676). You can also get most forms and publications at your local IRS office.

Earned Income Credit (EIC) Notice

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 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 Circular E.

Common Errors on Forms W-2

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

• Use ink that is too light to make entries. (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. (Copy A is preprinted with dollar signs.)
• Inappropriately check the Retirement plan checkbox in box 13. (See Retirement plan on page 10.)

General Instructions for Forms W-2 and W-3

Who must file Form W-2.   Employers must file Form W-2 for wages paid to each employee from whom:

• Income, social security, or Medicare taxes were withheld or
• 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.

Also, every employer engaged in a trade or business who pays remuneration for services performed by an employee, including noncash payments, must furnish a Form W-2 to each employee even if the employee is related to the employer.

If you are required to file 250 or more Forms W-2, see Magnetic media/electronic reporting later.

Who must file Form W-3.   Anyone required to file Form W-2 must file Form W-3 to transmit Copy A of Forms W-2. Make a copy of Form W-3; keep it and Copy D (For Employer) of Forms W-2, with your records for 4 years. Be sure to use Form W-3 for the correct year.

Household employers, even those with only one household employee, must file Form W-3 with Form W-2. On Form W-3 check the Hshld. emp. checkbox in box b. For more information, see Schedule H, (Form 1040), Household Employment Taxes.

A transmitter or sender (including a service bureau, paying agent, or disbursing agent) may sign Form W-3 for the employer or payer only if the sender:

• Is authorized to sign by an agency agreement (either oral, written, or implied) that is valid under state law and
• Writes For (name of payer) next to the signature.

If an authorized sender signs for the payer, the payer is still responsible for filing, when due, a correct and complete Form W-3 and related Forms W-2, and is subject to any penalties that result from not complying with these requirements. Be sure the payer's name and employer identification number (EIN) on Forms W-2 and W-3 are the same as those used on the Form 941, Employer's Quarterly Federal Tax Return, 943, Employer's Annual Tax Return for Agricultural Employees, CT-1, Employer's Annual Railroad Retirement Tax Return, or Schedule H (Form 1040), Household Employment Taxes, filed by or for the payer.

When to file.   File Copy A of Form W-2 with the entire page of Form W-3 by February 28, 2003. However, if you file electronically (not by magnetic media), the due date is March 31, 2003. You may owe a penalty for each Form W-2 you file late. See Penalties on page 6. If you terminate your business, see Terminating a business on page 5.

Extension to file.   You may request an extension of time to file Form W-2 by sending Form 8809, Request for Extension of Time To File Information Returns, to the address shown on that form. You must request the extension before the due date of Forms W-2 for your request to be considered. If approved, you will have an additional 30 days to file. See Form 8809 for details.

Even if you receive an extension to file Form W-2, you must still furnish Form W-2 to your employees by January 31, 2003. But see Extension to furnish Forms W-2 to employees on page 3.

Where to file.   File the entire Copy A page of Form W-2 with the entire page of Form W-3 at the following address:

Social Security Administration
Data Operations Center
Wilkes-Barre, PA 18769-0001

If you use Certified Mail to file, change the ZIP code to 18769-0002. If you use an IRS approved private delivery service, add ATTN: W-2 Process, 1150 E. Mountain Dr. to the address and change the ZIP code to 18702-7997. See Circular E for a list of IRS approved private delivery services.

Do not send cash, checks, money orders, etc. with the Forms W-2 and W-3 you submit to the SSA. Do not use the address above to file by magnetic media. (See SSA's MMREF-1, Magnetic Media Reporting and Electronic Filing, for the magnetic media filing address.) Employment tax forms (e.g., Form 941 or 943), remittances, and Forms 1099 must be sent to the IRS.

Send Copy 1 of Form W-2 to your state, city, or local tax department. For more information concerning Copy 1, contact your state, city, or local tax department.

Shipping and mailing.   If you file more than one type of employment tax form, please group Forms W-2 of the same type, with a separate Form W-3 for each type, and send them in separate groups. See the specific instructions for box b of Form W-3 on page 10.

Prepare and file Forms W-2 either alphabetically by employees' last names or numerically by employees' social security numbers. Please do not staple or tape Form W-3 to the related Forms W-2 or Forms W-2 to each other. These forms are machine read. Staple holes or tears interfere with machine reading. Also, do not fold Forms W-2 and W-3. Send the forms to the SSA in a flat mailing.

If you have a large number of Forms W-2 to send with one Form W-3, you may send them in separate packages. Show your name and EIN on each package. Number them in order (1 of 4, 2 of 4, etc.) and place Form W-3 in package 1. Show the number of packages at the bottom of Form W-3 below the title. If you mail them, you must send them First-Class.

Magnetic media/electronic reporting.   If you are required to file 250 or more Forms W-2, you must file them on magnetic media (or electronically) unless the IRS granted you a waiver. You may be charged a penalty if you fail to file on magnetic media (or electronically) when required.

You are encouraged to file on magnetic media (or electronically) even if you are filing fewer than 250 Forms W-2. Small submitters may be able to file Forms W-2 using the Internet. Visit the SSA Web Site at www.ssa.gov/employer for more information.

You may request a waiver on Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media. Submit Form 8508 to the IRS at least 45 days before the due date of Form W-2. See Form 8508 for filing information.

If you are filing Forms W-2 using magnetic tape or cartridge, complete Form 6559, Transmitter Report and Summary of Magnetic Media; you may also need Form 6559-A, Continuation Sheet for Form 6559. Do not use Form W-3.

If you file on magnetic media (or electronically), do not file the same returns on paper.

Magnetic media reporting specifications for Form W-2 are in the SSA's MMREF-1, a publication that can be downloaded by accessing SSA's Web Site at www.ssa.gov/employer. You can also get magnetic media (or electronic) specifications by calling SSA's Employer Reporting Branch at 1-800-772-6270.

Reporting instructions for magnetic media/electronic filing may differ from the paper reporting instructions. For example, magnetic media/electronic filers may enter more than four items in box 12 in one individual's wage report, but paper filers are limited to four entries in box 12 on Copy A of each Form W-2.

Furnishing Copies B, C, and 2 to employees.   Furnish Copies B, C, and 2 of Form W-2 to your employees, generally, by January 31, 2003. You will meet the furnish requirement if the form is properly addressed and mailed on or before the due date.

If employment ends before December 31, 2002, you may give copies at any time after employment ends, but no later than January 31, 2003. If an employee asks for Form W-2, give him or her the completed copies within 30 days of the request or within 30 days of the final wage payment, whichever is later. However, if you terminate your business, see Terminating a business on page 5.

You may give Forms W-2 to employees on IRS official forms or on acceptable substitute forms (see Substitute forms on page 1). Be sure the Forms W-2 you provide to employees are clear and legible and comply with the requirements in Pub. 1141.

Extension to furnish Forms W-2 to employees.   You may request an extension of time to provide Forms W-2 to employees by sending a letter to:

IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430

Mail your letter on or before the due date for furnishing Forms W-2 to employees. It must include:

• Your name and address,
• Your employer identification number,
• Type of return,
• A statement that you are requesting an extension to furnish Forms W-2 to employees,
• Reason for delay, and
• Your signature or that of your authorized agent.

Undeliverable Forms W-2.   Keep for 4 years any employee copies of Forms W-2 that you tried to deliver but could not. Do not send undeliverable Forms W-2 to the SSA.

Taxpayer identification numbers.   Employers use an employer identification number (EIN) (00-0000000). Employees use a social security number (SSN) (000-00-0000). When you list a number, please separate the nine digits properly to show the kind of number.

The IRS uses SSNs to check the payments you report against the amounts shown on the employees' tax returns. The SSA uses SSNs to record employees' earnings for future social security and Medicare benefits. When you prepare Form W-2, be sure to show the correct SSN for each employee. See section 4 of Circular E for information on verification of SSNs.

First | Next

Instructions Index | 2002 Tax Help Archives | Tax Help Archives | Home