Instructions for Forms W-2 and W-3 (2007)

Instructions for Forms W-2 and W-3 - Introductory Material

This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

What's New

Relocation of employee's SSN on Form W-2. We moved the “Employee's social security number” box on Form W-2 from box d to box a. We moved the “Control number” box, optionally used by some employers to identify individual Forms W-2, from box a to box d. We also relocated the form ID number (“22222”) and “Void” boxes to the top left corner of Form W-2. We made these changes to protect the employee's SSN from disclosure when employers furnish Forms W-2 to their employees using a window envelope and to enhance processing efficiency.

Relocation of form ID on Form W-3. For consistency with the revisions to Form W-2, we relocated the form ID number (“33333”) to the top left corner of Form W-3.

Reminders

Distributions from governmental section 457(b) plans of state and local agencies. Generally, report distributions from section 457(b) plans of state and local agencies on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. See Notice 2003-20 for details. You can find Notice 2003-20 on page 894 of Internal Revenue Bulletin 2003-19 at www.irs.gov/pub/irs-irbs/irb03-19.pdf.

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 Pub. 15 (Circular E).

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, Employer's Supplemental Tax Guide, for additional information.

Extended due date for electronic filers. If you file your 2007 Forms W-2 with the Social Security Administration (SSA) electronically, the due date is extended to
March 31, 2008. For information on how to file electronically, see Electronic reporting on page 3.

Form 944. Use the “944” checkbox in box b of Form W-3 if you filed Form 944, Employer's ANNUAL Federal Tax Return. Also use the “944” checkbox if you filed Forma 944(SP), the Spanish version of Form 944.

Nonqualified deferred compensation plans. Section 409A, added by the American Jobs Creation Act of 2004, provides that all amounts deferred under a nonqualified deferred compensation (NQDC) plan for all taxable years are currently includible in gross income unless certain requirements are satisfied. See Nonqualified deferred compensation plans on page 7.

Online filing of Forms W-2 and W-3. File Forms W-2 and W-3 electronically by visiting SSA's Employer Reporting Instructions and Information website at www.socialsecurity.gov/employer, selecting “Electronically File Your W-2s,” and logging into “Business Services Online (BSO).” SSA's “Create Forms W-2 Online” option allows you to create “fill-in” versions of Forms W-2 for filing with the SSA and to print out copies of the forms for filing with state or local governments, distribution to your employees, and for your records. Form W-3 will be created for you based on your Forms W-2. Also see Online wage reporting on page 2.

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 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 customer service site. The IRS operates a centralized customer service 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 electronic filing of Forms W-2, contact the SSA at 1-800-772-6270 or visit the SSA website at www.socialsecurity.gov/employer.

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 any other tax information, call 1-800-829-4059.

Online wage reporting. Using a personal computer and a modem, you can access SSA's Business Services Online (BSO) to electronically report wage data. To obtain information regarding filing wage data electronically with SSA or to access BSO, visit the SSA's Employer Reporting Instructions and Information website at www.socialsecurity.gov/employer. Call the SSA at 1-888-772-2970 if you experience problems using any of the services within BSO.

The website includes information on electronic filing, some IRS and SSA publications, and general topics of interest about annual wage reporting. You can also use BSO to ask questions about wage reporting.

Employers can also electronically file MMREF-1 wage reports. See Electronic reporting on page 3.

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

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

You can also call the IRS with your employment tax questions at 1-800-829-4933 (hours of operation are Monday through Friday 8:00 a.m to 8:00 p.m. local time) or visit the IRS website at www.irs.gov and type “Employment Taxes” in the Keyword/Search Terms box.

How To Get Forms and Publications

Internet. You can access the IRS website 24 hours a day, 7 days a week at www.irs.gov to:

Download forms, instructions, and publications.
Order IRS products online.
See answers to frequently asked tax questions.
Search publications online by topic or keyword.
Send us comments or request help by email.
Sign up to receive local and national tax news by email.

Do not file Copy A of Forms W-2, W-3, W-2c, and W-3c downloaded from the IRS website with the SSA. They are provided for informational purposes only. A penalty of $50 per information return may be imposed for filing such forms that cannot be scanned.

IRS Tax Products CD. You can order IRS Publication 1796, IRS Tax Products CD, and obtain:

Current-year forms, instructions, and publications.
Prior-year forms, instructions, and publications.
Bonus: Historical Tax Products DVD—Ships with the final release.
Tax Map: an electronic research tool and finding aid.
Tax law frequently asked questions (FAQs).
Tax Topics from the IRS telephone response system.
Fill-in, print, and save features for most tax forms.
Internal Revenue Bulletins.
Toll-free and email technical support.

The CD is released twice during the year.

The first release will ship the beginning of January 2007.
The final release will ship the beginning of March 2007.

Purchase the CD-ROM from National Technical Information Service (NTIS) at www.irs.gov/cdorders for $35 (no handling fee) or call 1-877-CDFORMS (1-877-233-6767) toll free to buy the CD-ROM for $35 (plus a $5 handling fee). Price is subject to change.

By phone and in person. You can order forms and publications by calling 1-800-TAX-FORM (1-800-829-3676). You can also get most forms and publications at your local IRS office.

Common Errors on Forms W-2

Forms W-2 provide information to your employees, the SSA, the IRS, and state and local governments. Avoid making the following errors, which cause processing delays.

Do not:

Omit the decimal point and cents from entries.
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. They have been removed from Copy A and are not required.
Inappropriately check the “Retirement plan” checkbox in
box 13. See Retirement plan on page 13.
Misformat the employee's name in box e. Enter the employee's first name and middle initial in the first box, his or her surname in the second box, and his or her suffix (optional) in the third box.