W-2s

I have a couple very important things to say about W-2. But first, a quick reminder what a W-2 is.

What is a W-2?

A W-2 - Wage and Tax Statement is issued by an employer to document the wages and benefits they paid during the course of the year to each employee. Employees receive a set of identical copies to use to file their tax returns. The employer also sends a copy of the W-2 to the Social Security Administration which shares the information with the Internal Revenue Service (IRS).

What information is on the W-2?

The W-2 lists the amount of taxable wages the employer paid the employee for that year. It also identifies the amount of federal and state withholding and the employee's contribution to their Social Security and Medicare accounts. The employer also uses the W-2 to document benefits the employee received which might be subject to special tax treatment. This could include retirement plan contributions, dependent care benefits, moving expenses and health insurance.

What if the W-2 doesn't match the employee's last pay stub of the year?

The year to date wages on the employee's last pay stub often doesn't match their W-2.  Retirement plans and health insurance may not be subject to income tax and the W-2 reflects the total wages less the non-taxable portions of these types of benefits.

When is the W-2 issued?

Employers are required to mail the W-2 to the employee by January 31st each year. While the employer can choose to issue them before the end of the month, they aren't late until plenty of mailing time has been allotted.

What if the W-2 doesn't come or is incorrect?

The first step in either case is for the employee to contact the employer. If the original W-2 is wrong, the employer can use the form W-2C to make corrections to the original document. A missing W-2 can be re-sent to the employee.

If the problem continues, the employee can contact the IRS at 1-800-829-1040 and explain the situation. Taxpayers who call the IRS should have all the contact information for the employer available since the IRS will try to contact the employer about the missing W-2. They will also send the taxpayer a Form 4852 - Substitute W-2 to use to file their tax return if the W-2 doesn't arrive in time for the taxpayer to file their tax return. It's important that the correct wage income be reported on the taxpayer's tax return even if the W-2 is incorrect or missing. The IRS will match income reported to them by employers to what the employee include on their tax return. Missing income will generate a notice wanting more tax money, and interest and penalties, on anything not reported on the original return. The taxpayer is required for that tax, interest and penalty, not the employer,

 

Most taxpayers will receive at least one W-2 each year; it's the most common tax information document issued. The W-2 gives taxpayers the amount of taxable income they earned during the year and employee benefits which get special tax treatment on the tax return. Taxpayers should check their W-2s for accuracy and make sure they have W-2s from all their employers.

 

W-2s can be found in many different designs but the IRS has standardized the information reported on the form by the box it is placed. Federal wages will always be found in Box 1 and Federal tax withholding in Box 2.

Important Information!

First, employers do not have to have W-2s mailed until January 31, 2019. They are not late if you haven’t received your W-2 when you are ready to file your return in January. You need to wait. Nor can you electronically file your tax return without the W-2 (you can’t mail it either since a copy needs to be included with the return). There are ways to handle unavailable W-2s in mid-February or later but not in January. Just wait!

 

We’ve seen many tax changes that will show up on 2018 tax returns. For a lot of taxpayer this will result in lower taxes but not larger refunds!  When the Tax Cuts and Jobs Acts went into effect, I could project how the tax changes would change my client’s 2018 return. It sounded great. That projection, however, used the 2017 information including withholding. But the withholding was changed to reflect the lower tax during 2018. Taxpayers received more in their paychecks. Taxpayers dreaming of big refunds because of TCJA may see a smaller refund than they though because they have already gotten some of that money back.

BTW

The IRS has not announced the first date for electronic filing. The best I can do is prepare the return and hold it until filing is opened.

 

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