Although this tax is included in the box 2 total, it must be separately shown here. Employers are responsible for ensuring that Forms W-2 are furnished to employees and that Forms W-2 and W-3 are filed with the SSA correctly and on time, even if the employer contracts with a third party to perform these acts. The IRS strongly suggests that the employer’s address, not the third party’s address, be the address on record with the IRS. This will ensure that you remain informed of tax matters involving your business because the IRS will correspond to the employer’s address of record if there are any issues with an account. An employer’s matching or nonelective contribution to an employee’s SIMPLE retirement account is not subject to federal income tax withholding or social security, Medicare, or railroad retirement taxes, and is not to be shown on Form W-2.

The higher penalty amounts apply to returns required to be box 11 nonqualified plans filed after December 31, 2025. Noncompliance with Section 409A can result in severe penalties, including a 20% additional tax on top of ordinary income taxes. To avoid these penalties, employers must ensure plan documentation and administrative practices align with IRS guidelines, including proper deferral elections, distribution timing, and accurate record-keeping.

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If the insurance company or other third-party payer did not notify you in a timely manner about the sick pay payments, it must prepare Forms W-2 and W-3 for your employees showing the sick pay. For specific reporting instructions, seesection 6 of Pub. The second option is to file one set of Forms W-2 for wages subject only to Medicare tax and another set for wages subject to both social security and Medicare taxes. Use a separate Form W-3 to transmit each set of Forms W-2. For the Medicare-only Forms W-2, check “Medicare govt. For the Forms W-2 showing wages subject to both social security and Medicare taxes, check “941” (or “944”) in box b of Form W-3 or Form W-3SS.

• File a separate Form W-3c for each tax year, for each type of form, and for each kind of payer/employer combination.
• Do not send cash, checks, money orders, or other forms of payment with the Forms W-2 and W-3 that you submit to the SSA.
• For certain members of the clergy and religious workers who are not subject to social security and Medicare taxes as employees, boxes 3 and 5 of Form W-2 should be left blank.
• Additional reporting guidance, including information about the transitional reporting rules that apply, is available on IRS.gov at Affordable Care Act (ACA) Tax Provisions.
• Include the amount in box 14 if you are a railroad employer.

The U.S. Treasury Department and the CNMI Division of Revenue and Taxation entered into an agreement under 5 U.S.C. section 5517 (“5517 agreement”) in December 2006. Federal employers are also required to file quarterly and annual reports with the CNMI Division of Revenue and Taxation. For questions, contact the CNMI Division of Revenue and Taxation.

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Report the aggregate amount of income deferred under section 83(i) elections as of the close of the calendar year. Use this code only if you reimbursed your employee for employee business expenses using a per diem or mileage allowance and the amount that you reimbursed exceeds the amount treated as substantiated under IRS rules. Also show deferrals under a SIMPLE retirement account that is part of a section 401(k) arrangement. Box 10—Dependent care benefits (not applicable to Forms W-2AS, W-2CM, W-2GU, or W-2VI).

Nonqualified moving expenses and expense reimbursements are reported in boxes 1, 3, and 5 (use box 14 if railroad retirement taxes apply) of Form W-2. These amounts are subject to federal income tax withholding and social security and Medicare taxes (or railroad retirement taxes, if applicable). She earned $50,000 in wages, but deferred $35,000 of that amount in a nonqualified deferred compensation plan.

• Check this box if you are a state or local government or instrumentality.
• Show the total that you paid or reimbursed for qualified adoption expenses furnished to your employee under an adoption assistance program.
• A non-qualified plan is meant to meet specialized needs for certain employees, mainly key executives, and act as a tool for their recruitment and retention.
• Enter the two-letter abbreviation for the name of the state or territory being reported on Form(s) W-2.
• This flexibility is meant to work in tandem with people who are high earners and want to defer larger portions of what they’re making.

Forms & Instructions

NQDC plans are typically offered to a select group of highly compensated employees, while 401(k) plans are designed to be more inclusive and open to more employees. You are also taxed on the earnings you get on your deferrals when they are paid to you. The rate of return is fixed by the terms of the plan. It may, for example, match the rate of return on the S&P 500 Index.

Generally, noncash payments are considered to be wages. Include employee business expense reimbursements and moving expenses reported in box 1. If you paid the employee’s share of social security and Medicare taxes rather than deducting them from wages, see Employee’s social security and Medicare taxes (or railroad retirement taxes, if applicable) paid by employer . The total of boxes 3 and 7 cannot exceed $176,100 (2025 maximum social security wage base).

Use BSO’s online fill-in forms to create, save, and submit Forms W-2 and W-2c to the SSA electronically. BSO lets you print copies of these forms to file with state or local governments, distribute to your employees, and keep for your records. BSO generates Form W-3 automatically based on your Forms W-2. You can also use BSO to upload wage files to the SSA, check on the status of previously submitted wage reports, and take advantage of other convenient services for employers and businesses.

The total of $3,000 (less the social security and Medicare taxes withheld) was paid to Sam’s estate on July 20, 2025. Because Sam’s employer made the payment during the year of death, the employer must withhold social security and Medicare taxes on the $3,000 payment and must complete Form W-2 as follows. The SSA has enhanced its secure BSO website to make it easier to register and navigate.

They may be provided in addition to or instead of 401(k)s. A non-qualified deferred compensation plan, if one is available to you, can be a considerable benefit over the long run. You’re investing money for your future while delaying taxes owed on earnings. That should get you a greater accrual of earnings. However, the day of reckoning will come when you start to collect your deferred compensation. The plans are typically offered as a type of bonus to upper-level executives, who may max out their allowable contributions to the company’s qualified retirement plan.

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Misreporting can lead to audits, penalties, and extra tax liabilities, making it imperative for employers to include the correct information. However, the bulk of the federal income tax withholding for non-qualified plans is not calculated or withheld until the money is actually paid out. Since it’s going to be calculated based on future tax rates (sometimes decades in the future, if the employee is far from retirement), there’s no real way to predict what those taxes will look like. If you received income from a nonqualified deferred compensation plan or nongovernmental section 457 plan that is included in box 1 of your Form W-2, or in box 1 of Form 1099-NEC, don’t include that income on line 8 of the worksheet. The income should be shown in (a) box 11 of your Form W-2, (b) box 12 of your Form W-2 with code Z, or (c) box 15 of Form 1099-MISC. If it isn’t, contact your employer or the payer for the amount of the income.

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Employers should still withhold federal income tax on taxable compensation from railroad employees exercising their stock options. Pension or annuity income from a nonqualified deferred compensation plan or nongovernmental section 457 plan is now reported on Schedule 1, line 8t. These amounts must also be reported in box 3, up to the $106,800 wage limit, and box 5. The purpose of Box 11 is for the Social Security Administration to determine if any part of the amount reported in Box 1 was earned in a prior year. The SSA uses this information to verify that it has properly applied the Social Security earnings test and paid the correct amount of benefits.

If you also have to correct forms of employees who are not household employees, complete a separate Form W-3c. Check this box if you file Forms 941 and no other category applies. A church or church organization should check this box even if it is not required to file Forms 941 or 944. If you are a railroad employer sending Forms W-2 for employees covered under the Railroad Retirement Tax Act (RRTA), check the “CT-1” box.

Steps for Reporting on Your Return

Contact your state or locality for specific reporting information. If you made excess golden parachute payments to certain key corporate employees, report the 20% excise tax on these payments. If the excess payments are considered to be wages, report the 20% excise tax withheld as income tax withheld in box 2. Employee stock options are not “money remuneration” subject to the RRTA. Railroad employers should not withhold Tier 1 and Tier 2 taxes when employees covered by the RRTA exercise stock options.

This should be the same as shown on your Forms 941, 941-SS, 943, 944, CT-1, or Schedule H (Form 1040). Include the suite, room, or other unit number after the street address. If the post office does not deliver mail to the street address and you use a P.O.