What to Do With an Incorrect W-2
What are your options?
It happens more often than you might think—you receive your W-2 and get ready to do your taxes, then you notice that the wages reported on there seem to be wrong. You double-check against your own records and realize that the information is indeed incorrect. You have to get the situation fixed, and you have to do it quickly because the clock is ticking toward the tax-filing deadline. You have a few options, and the rules and guidelines are pretty black-and-white.
Verify Any Errors
Make sure the information on your W-2 really is in error. Sometimes the amounts shown are slightly different from the amounts reported on your final pay stub of the year. The W-2 might include adjustments in taxable income or tax-free benefits.
The easy solution is often to ask your employer or human resources department for an explanation.
If this doesn't seem to be the problem, or if your employer can't or won't shed light on the situation, the error might be more serious. It's possible that your employer is trying to hide W-2 income from the IRS, particularly if they've been having financial difficulties. The company must pay half your Social Security and Medicare taxes based on your earnings, so the less you earn, the less they must pay in these payroll taxes.
If business is bad and the company hasn't been paying these taxes in full, they might have some incentive to fudge the numbers a bit. This isn't a good thing and, in fact, the IRS would want to know about it.
Contact the IRS
Contact the IRS for help if your W-2 is obviously and significantly wrong and you suspect dishonesty on the part of your employer or simply can't get the company to cooperate. The IRS will investigate the matter directly.
You can call toll-free at 1-800-829-1040 or visit a Taxpayer Assistance Center. The IRS will send your employer a letter instructing them to issue a corrected version within 10 days.
You can file your tax return reporting what you think is the correct amount of wages and withholding using Form 4852, the "Substitute for Form W-2," and the IRS will advise you of this option when you reach out to them. You'll have to reference your pay stubs if you use this form.
The IRS will probably take a bit longer to process your tax return because it must verify the amounts. The IRS will contact you with any questions.
If Bankruptcy Is the Problem
There might be another way to solve the problem if your employer has gone bankrupt and won't cooperate or is out of business. According to the IRS, it's sometimes possible for an employee to follow up directly with the bankruptcy court in this case. The bankruptcy trustee might be able to provide a corrected W-2 rather than the employee having to use Form 4852.
Contact the bankruptcy court in your area if you find yourself in this situation. Ask how you can contact the trustee who is overseeing your previous employer's bankruptcy case, then reach out and explain your problem.
Errors With Other Information
W-2 errors aren't limited to income and withhold discrepancies. The spelling of your name, a name change due to marriage or divorce, your address, or your Social Security number might be wrong, too, but this is usually a much easier fix.
It should be a simple matter to ask your employer to correct your name or your Social Security number, although you'll probably have to provide proof of your number.
The company might charge you a small fee for a replacement W-2 if the error is the result of you providing the company with the wrong identifying information when you completed and submitted your Form W-4 when you began employment.
As for a wrong address—maybe you've moved since you began working for this employer and you failed to update your information with the company—this is typically no problem. You can go ahead and submit the W-2 with your tax return as long as your correct and current address is cited on your Form 1040. You'll want to let your employer know of the change, however.
The Bottom Line
The IRS takes notice of taxpayers doing the right thing, and agents will often go out of their way to provide valuable help. But you'll need to help the IRS, too. Always keep copies of your pay stubs and records so you can quickly provide any additional information if a discrepancy occurs.
The IRS also takes notice of taxpayers who don't do the right thing, so it's important that you resist the urge to just go with the flow and use the erroneous W-2, particularly if doing so is advantageous to you. Get to the bottom of the situation. It's a safe guess that the IRS will notice the discrepancy sooner or later, particularly if multiple employees are involved, and you don't want to be found as culpable for wrongdoing as your employer.
If you feel like you need an accountant to help you because your W-2 is wrong, look for an enrolled agent, a certified public accountant, or a tax attorney. These professionals can talk to the IRS on your behalf without you being physically present.
Note: Tax laws change periodically. You should always consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and it is not a substitute for tax advice.
IRS. "Topic No. 751 Social Security and Medicare Withholding Rates." Accessed October 16, 2020.
IRS. "W-2 - Additional, Incorrect, Lost, Non-Receipt, Omitted." Accessed October 16, 2020.
IRS. "Publication 908 (02/2020), Bankruptcy Tax Guide." Accessed October 16, 2020.
IRS. "2020 Form W-4." Accessed October 16, 2020.