You rely on your Form W-2 when you file your taxes. The IRS needs the information to determine whether you had enough taxes withheld throughout the year. Ideally, your W-2 will arrive with your name, address and financial information correct and up to date. But as you probably know, mistakes happen, especially when employers are tasked with providing W-2s to an enormous staff. If your W-2 is incorrect, there are a few steps you can take to make it IRS-ready.
If your W-2 is incorrect, first check with your employer. If they won’t correct the error, get in touch with the IRS.
Dealing with an Incorrect W-2
Understanding Common W-2 Errors
Name and Contact Information Errors
What to Do if Your W-2 Is Late
Finding Your W-2
Tracking Down IRS Wage Transcripts
In all too many cases, you’ll receive a corrected W-2 after filing your taxes, especially if you’ve been persistently requesting your form and finally gave up and filed without it. If you receive that form and it matches what you submitted, simply file the form with your other tax records for the year and forget about it. If you’re ever audited, you’ll have the form to show it matched what you reported that year.
If the W-2 you receive after filing doesn’t match the numbers you provided the IRS, you’ll need to amend your return using Form 1040X. You’ll simply list what you originally claimed in Column A and enter the correct amount in Column C, with the net change in Column B. This keeps you from having to file a new tax return. If you receive your W-2 before the filing deadline and get your form in on time, you’ll be able to avoid any penalties on top of the taxes you owe. If you didn’t owe the IRS money, you won’t have to worry about this part of it. But you’ll only have three years from the date you filed the original tax return to file an amendment. If you paid taxes, you’ll have only two years to file an amended return.
Form 1099 and Errors
If you’re an independent contractor, you’ll receive a Form 1099 instead of a W-2. You’re responsible for paying taxes on every dollar you make, whether you receive a form or not. However, employers are only required to send 1099s to those they paid $600 or more for business-related services. So, if you made $200 from one client and $400 from another, you’ll be responsible for tracking it all and reporting it.
But even clients who pay $600 or more will sometimes neglect to send out a form. Since you’re responsible for reporting all income on your end, receiving a form makes no difference. You should also make sure that your records match what your employer states that you were paid. As with W-2s, if your 1099 is incorrect, you need to reach out to the issuer and ask for it to be amended. If you file and your information doesn’t match the client’s, you may be flagged for an audit.
If your employer went belly-up at some point during or after the tax year, you’ll find yourself in a sticky situation. Going out of business, even if it’s as a result of bankruptcy or shady dealings, does not release an employer from its obligations to send a W-2. The business or its owner could still face fines for failing to send forms to each person on the payroll during a specific tax year. However, that doesn’t help you if you’re trying to obtain your form and having no luck getting a response.
As with erroneous or missing W-2s, though, you’ll simply wait until mid-February and contact the IRS if you have no luck getting your previous employer to issue a W-2. The IRS will send a letter to the address provided and hopefully get action. If you still have received no form by mid-March, use Form 4852 and add up your pay and taxes from your paystub. You’ll still be able to file by the tax deadline and do your part, even if your former employer chooses to be noncompliant. You may have former co-workers who are in the same boat, so reach out and let them know what they need to do to report their earnings with their now-defunct previous employer.
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- Entrepreneur.com: 1099 Rules That Can Make or Break You This Year
- The Motley Fool: What Happens if I Get an Incorrect 1099?