General Instructions for Forms W-2 and W-3 2025 Internal Revenue Service

If you do not provide the correct employee name and SSN on Form W-2, you may owe a penalty unless you have reasonable cause. 1586, Reasonable Cause Regulations & Requirements for Missing and Incorrect Name/TINs on Information Returns. If you do not file corrections and you do not meet any of the exceptions to the penalty, the penalty is $340 per information return. The maximum penalty is $4,098,500 per year ($1,366,000 for small businesses). For federal tax purposes, virtual currency is treated as property.

Common Errors on Forms W-2

You may use this box to correct an establishment number. The IRS will not use Form W-3c to update your address of record. If you wish to change your address, file Form 8822 or Form 8822-B.

How To Get Forms and Publications

Enter the total of amounts reported in boxes 1 through 8, 10, and 11 as “Previously reported” and “Correct information” from Forms W-2c. You must use a separate Form W-3c for each type of Form W-2 (Forms W-2, W-2AS, W-2CM, W-2GU, W-2VI, or W-2c) being corrected. You must also use a separate Form W-3c for each kind of payer/employer combination in box c.

In a few situations, reporting instructions vary depending on the filing method you choose. For example, you can include every type of box 12 amount in one employee wage record if you upload an electronic file. If you file on paper or create Forms W-2 online, you can include only four box 12 amounts per Form W-2. See the TIP for Box 12—Codes under Specific Instructions for Form W-2. Extensions of time to file Form W-2 with the SSA are not automatic.

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This box shouldn’t be used box 11 nonqualified plans if you had a deferral and a distribution in the same calendar year. An employee’s contributions to an Archer MSA are includible in income as wages and are subject to federal income tax withholding and social security and Medicare taxes (or railroad retirement taxes, if applicable). Employee contributions are deductible, within limits, on the employee’s Form 1040 or 1040-SR. In these instructions, reference to Forms W-2 and W-3 includes Forms W-2AS, W-2CM, W-2GU, W-2VI, and W-3SS, unless otherwise noted. These instructions are not applicable to wage and tax statements for Puerto Rico. Virgin Islands (USVI) wages paid by USVI employers.

• If the name does not fit in the space allowed on the form, you may show the first and middle name initials and the full last name.
• See Federal employers in the CNMI , earlier, for more information.
• Show the total dependent care benefits under a dependent care assistance program (section 129) paid or incurred by you for your employee.
• See Correcting an incorrect tax year and/or EIN incorrectly reported on Form W-2 or Form W-3 , later, if an error was made on a previously filed Form W-3.
• Instead, use Form W-2 to show U.S. income tax withheld.

NQDC plans are sometimes called 409(a) plans after the section of the U.S. The IRS has a sample 83(b) form that can be used to report this compensation currently rather than deferring it. If you don’t make the Section 83(b) election, you will owe taxes on the property and its appreciation at the time it is received. However, if you make the election you will be giving up the ability to deduct any losses in the future should the value depreciate. Any salary, bonuses, commissions, and other compensation you agree to defer under an NQDC plan are not taxed in the year in which you earn it. The deferral amount may be recorded on the Form W-2 you receive for the year.

Withholding on distributions varies by plan type and tax bracket. For qualified plans like 401(k)s, lump-sum distributions are subject to mandatory 20% federal withholding. For NQDC plans, employers may use the supplemental wage withholding rate (22% for income up to $1 million) or the employee’s marginal tax rate for amounts exceeding $1 million. Employees should monitor withholding closely and consider adjusting allowances or making estimated tax payments to avoid underpayment penalties. Proper planning ensures withholding aligns with overall tax obligations, reducing the risk of unexpected liabilities. Interpreting the details in Box 11 and Box 12 on your W-2 form is critical for managing deferred compensation and ensuring tax compliance.

Even if you request and are granted an extension of time to file Forms W-2, you must still furnish Forms W-2 to your employees by February 2, 2026. But see Extension of time to furnish Forms W-2 to employees. 1223 prohibits advertising on Form W-2c and envelopes containing Form W-2c. You must not include advertising on any copy of Form W-2c, including coupons providing discounts on tax preparation services attached to the employee copies, or on an envelope containing any copy of Form W-2c. If you are not using the official IRS form to furnish Form W-2c to employees or to file with the SSA, you may use an acceptable substitute form that complies with the rules in Pub. 1223, General Rules and Specifications for Substitute Forms W-2c and W-3c.

Also use the “944” checkbox if you filed Formulario 944 (sp), the Spanish-language version of Form 944. If you are required to e-file, you can request a waiver from this requirement by filing Form 8508, Application for a Waiver from Electronic Filing of Information Returns. Submit Form 8508 to the IRS at least 45 days before the due date of Form W-2, or 45 days before you file your first Form W-2c. See Form 8508 for information about filing this form. Additionally, Forms W-2 and W-2c electronic and paper wage reports for household employers will be rejected under the following conditions. The due date for filing 2025 Forms W-2, W-2AS, W-2CM, W-2GU, W-2VI, W-3, and W-3SS with the SSA is February 2, 2026, whether you file using paper forms or electronically.

• Contributions exceeding this threshold may be reported in Box 11 if they are part of a nonqualified plan.
• You must also file Forms W-2 with the SSA by the due date of your final Form 941 or 944.
• You must not include advertising on any copy of Form W-2c, including coupons providing discounts on tax preparation services attached to the employee copies, or on an envelope containing any copy of Form W-2c.
• An entry made in any one of these copies will automatically populate to the other copies.
• For example, Code D is for elective deferrals to a 401(k) plan, while Code Z indicates income under a nonqualified deferred compensation plan that does not meet Section 409A requirements.

Code P—Excludable moving expense reimbursements paid directly to a member of the U.S. Armed Forces.

See Extension of time to furnish Forms W-2 to employees for more information. Taxable deferred compensation is typically reported on Form 1040 under wages and salaries. Consult IRS Publication 525 for guidance on handling various types of compensation, including deferred amounts. Reporting deferred compensation on your tax return requires understanding the relevant tax forms and figures.

On Copy A (Form W-2), do not enter more than four items in box 12. If more than four items need to be reported in box 12, use a separate Form W-2 to report the additional items (but enter no more than four items on each Copy A (Form W-2)). On all other copies of Form W-2 (Copies B, C, etc.), you may enter more than four items in box 12 when using an approved substitute Form W-2. Railroad employers must withhold social security and Medicare taxes from taxable compensation of employees covered by social security and Medicare who are exercising their employee stock options.

Enter the total of state/local wages and income tax shown in their corresponding boxes on the Forms W-2 included with this Form W-3. If the Forms W-2 show amounts from more than one state or locality, report them as one sum in the appropriate box on Form W-3. Verify that the amount reported in each box is an accurate total of the Forms W-2. Show the spread (that is, the fair market value (FMV) of stock over the exercise price of option(s) granted to your employee with respect to that stock) from your employee’s (or former employee’s) exercise of nonstatutory stock option(s).

However, any uncollected Additional Medicare Tax (on the cost of group-term life insurance, which, in combination with other wages, is in excess of $200,000) is not reported with code N in box 12. Do not include an employee’s contribution in box 1, but do include it in boxes 3 and 5. (Use box 14 if railroad retirement taxes apply.) An employee’s total contribution must also be included in box 12 with code D or S. Show the total wages paid (before payroll deductions) subject to employee social security tax but not including social security tips and allocated tips. If reporting these amounts in a subsequent year (due to lapse of risk of forfeiture), the amount must be adjusted by any gain or loss. See Box 7—Social security tips and Box 8—Allocated tips .

For more information, see Box 12—Codes for Code DD—Cost of employer-sponsored health coverage . An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages or compensation in excess of $200,000 to an employee and continue to withhold it until the end of the calendar year. Additional Medicare Tax is imposed only on the employee. There is no employer share of Additional Medicare Tax. All wages and compensation that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold.