Can Your W2 Be Wrong? What to Do If It Is

The Form W-2, officially known as the Wage and Tax Statement, is a fundamental document for every employee in the United States. Employers issue this form annually to report the wages paid to employees and the federal, state, and local taxes withheld from their paychecks. It is used for accurately filing income tax returns. While generally reliable, W-2 forms can contain errors, so understanding how to address inaccuracies is important.

Common W-2 Errors

Inaccuracies on a W-2 can manifest in several ways, each with potential implications for tax filing and financial records. Personal information errors are frequent, including a misspelled name, an incorrect Social Security Number (SSN), or an outdated address. An incorrect SSN is problematic, potentially leading to IRS matching issues and affecting future Social Security benefits.

Wage and income errors represent another category of common W-2 discrepancies. This might involve an incorrect gross wage amount in Box 1, 3, or 5, potentially due to miscalculations or unreported compensation like bonuses or commissions. Errors can also arise if pre-tax deductions, such as contributions to a 401(k) or health insurance premiums, are not correctly subtracted, leading to an inflated taxable wage figure.

Withholding errors on the W-2 directly impact the amount of tax reported as paid throughout the year. Incorrect federal income tax withheld in Box 2, or incorrect state or local taxes in Boxes 17 or 19, can occur if the employee’s Form W-4 was not accurately processed or if there were payroll system glitches. Similarly, errors in Social Security (Box 4) or Medicare (Box 6) taxes can affect both current tax obligations and future benefit calculations.

Errors related to benefits reporting also appear on W-2s. Non-taxable benefits, such as pre-tax health insurance premiums, might be incorrectly included in taxable wages, artificially increasing an individual’s reported income. Conversely, taxable benefits, like group-term life insurance coverage exceeding $50,000, must be included in taxable income; their omission constitutes an error.

Verifying Your W-2 Accuracy

Upon receiving your W-2 form, verify its accuracy against your personal records. The primary document needed for this cross-reference is your last pay stub of the tax year, which typically provides year-to-date (YTD) totals for wages and withholdings. Gathering any year-end income statements or benefit summaries from your employer can also support this verification process.

Begin by checking your personal details, ensuring that your name matches your Social Security card exactly and that your Social Security Number and address are correct. Next, perform a line-by-line comparison of your W-2 with the YTD figures on your final pay stub. For instance, compare the “Wages, tips, other compensation” in Box 1 of your W-2 with your gross pay minus any pre-tax deductions shown on your pay stub.

Similarly, verify the federal income tax withheld in Box 2 and Social Security and Medicare wages and taxes in Boxes 3, 4, 5, and 6 against your pay stub’s YTD withholding amounts. Box 1 wages may be lower than your gross pay due to pre-tax deductions for items like 401(k) contributions or health insurance premiums, which are excluded from taxable income. Any significant discrepancies in these figures warrant further investigation.

Correcting an Incorrect W-2

If you identify an error on your W-2, the first step is to contact your employer’s payroll or human resources department. Clearly explain the specific discrepancy and provide supporting documentation, such as your pay stubs, to substantiate your claim. Employers are responsible for issuing a corrected W-2, which is formally known as Form W-2c, “Corrected Wage and Tax Statement.”

Form W-2c is used to amend various errors, including incorrect names, Social Security Numbers, or wage and tax amounts. After receiving your request, your employer should promptly process the correction and provide you with the updated form. Employers are generally expected to issue a W-2c as quickly as possible to avoid penalties for incorrect filings.

If your employer is unresponsive or unwilling to issue a corrected W-2 after reasonable attempts, you can contact the IRS for assistance. The IRS can initiate a “W-2 complaint” with your employer, requesting them to provide the correct form within a specified timeframe. You will need to provide your personal details, the employer’s information, employment dates, and an estimate of your wages and withheld taxes.

Should the tax filing deadline approach and you still have not received a corrected W-2, the IRS may allow you to use Form 4852, “Substitute for Form W-2, Wage and Tax Statement.” This form enables you to estimate your income and withheld taxes based on your pay stubs and other records, allowing you to file your return on time. You would attach Form 4852 to your tax return and retain all documentation supporting your estimates.

Finally, if you have already filed your tax return using the incorrect W-2 and subsequently receive a corrected W-2c that changes your tax liability or refund, you will need to file an amended tax return. This is done using Form 1040-X, “Amended U.S. Individual Income Tax Return.” Form 1040-X allows you to correct previously reported information if the changes on the W-2c affect your tax outcome.