LERI - Part VI - Chapter 5 - Where and When to File the W-2/W-3

Sep 19, 2026

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Guidance explains when and how to file IRS Forms W-2 and W-3 with the SSA, including the requirement to submit by the last day of February each year. It describes how to prevent duplicate earnings through correct completion of the W-3 “Kind of Payer” and related employment-type coding on magnetic media, plus reconciliation between Form W-2 and W-3 dollar amounts. It also covers common completion errors, proper W-2/W-3 entries for RRA-covered employers, segregation of railroad and social security employees, SSA magnetic media processing using EIN matching, and escalation steps for suspected filing errors.

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Where and When to File the W-2/W-3

Avoiding Duplicate Earnings

Common Error

Proper Completion of W-2/W-3

Segregating Railroad Retirement Employees and Social Security Employees

SSA Magnetic Media Form W-2

How to Participate in the Enhancement Processing

Where and When to File the W-2/W-3 The W-2/W-3 forms are Internal Revenue Service (IRS) forms that are filed with the SSA. The IRS receives this information from the SSA for federal tax data purposes. Employers must file Forms W-2 and W-3 by the last day of February each year. In addition, Form 6559, Transmitter Report and Summary of Magnetic Media, is filed for magnetic reports of Forms W-2. Instructions for completion are on the back of the form. Instructions for filing magnetic media W-2 reports are issued by SSA in its publication “Magnetic Media Reporting” which can be found on their web site [at](at www.ssa.gov/employer/pub.htm. If you submit Form W-2)[ ](at www.ssa.gov/employer/pub.htm. If you submit Form W-2)[www.ssa.gov/employer/pub.htm](at www.ssa.gov/employer/pub.htm. If you submit Form W-2)[. If you submit Form W-2](at www.ssa.gov/employer/pub.htm. If you submit Form W-2) data on magnetic media, do not submit the same W-2 data to SSA on paper forms. Duplicate Earnings Duplicate posted earnings are annual earnings that are erroneously posted as social security wages on an employee's record at SSA from the W-2 data and correctly posted on the corresponding employee record at the RRB from Form BA-3a, Annual report of Creditable Compensation. Duplicate earnings overstate an employee's lifetime earnings record, thus creating the potential fora benefit overpayment when a railroad retirement or social security benefit is paid to that individual. Correct completion of Forms W-2/W-3 is important in preventing duplicate earnings and correctly crediting an employee's earnings record. How to Avoid Duplicate Earnings The key concept in preventing duplicate earnings is to correctly identify the type of employment on Form W-3 for the accompanying W-2 data. It is important that employers covered under the RRA mark the correct box in the “Kind of Payer” block of the Form W-3.“CT-1” is the only box which should be marked. For magnetic media reports, railroad employees should be reported with an “X” in the Type Of Employment (TOE) field of the code E record. Whether reporting by paper or magnetic media, railroad employees should not have their railroad retirement tax reported as social security tax, nor their railroad earnings reported as social security wages. Dollar amounts reported on Forms W-2 should balance with those on Form W-3. Common Error A common error for railroad employers is to enter the Medicare tax amounts withheld in the“Medicare tax withheld” block. This Medicare box is for employees covered under the SSA. If the Medicare box is completed, SSA looks for corresponding social security taxes. Because railroad employers do not make entries for social security wages, this creates a discrepancy which must be resolved. Proper Completion ofW-2/W-3 In accordance with the SSA instructions for completion of Form W-2/W-3, employers covered under the RRA must complete the forms as follows: • Mark "CT-1" under "Kind of Payer" on Form W-3. "CT-1" is the only box that should be marked. For magnetic media reports, code an "X" in the Type of Employment (TOE) field of the code E record; • On Form W-2, make no entries in boxes 3, 4, 5, and 6. The corresponding boxes on Form W-3 should also be blank for RRA covered employees; and • RRA covered employers must enter the amount of Tier I and Tier II tax withheld in the box marked “Other”. You may also include optional information such as Medicare tax, Tier I and Tier II compensation in the same box. The Forms W-2/W-3 example at the end of this chapter illustrates the correct completion of the forms for employees covered under the RRA. Segregating Railroad Retirement Employees and Social Security Employees If you have employees covered under the SSA by virtue of the segregation of your rail labor union business as set forth in Section 202.3 ofthe RRB's Regulations, separate forms W-2/W-3 should be filed for the employees of your separate non-rail labor un

FAQs

When must employers file Forms W-2 and W-3?

Employers must file Forms W-2 and W-3 by the last day of February each year.

How do employers avoid duplicate earnings?

Correctly identify the type of employment on Form W-3 for the accompanying W-2 data, mark only “CT-1” under “Kind of Payer,” and ensure railroad employees are coded correctly for magnetic media. Dollar amounts on Forms W-2 should balance with those on Form W-3.

What is a common completion error and why is it a problem?

A common error is entering Medicare tax amounts in the “Medicare tax withheld” block. If completed, SSA looks for corresponding social security taxes; since railroad employers do not report social security wages, this creates a discrepancy that must be resolved.

Sep 19, 2026

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