What Happens If I Don’t Put a W2 on My Taxes?

A Form W-2, the Wage and Tax Statement, is a document employers provide to employees annually. This form reports an individual’s income and taxes withheld to the Internal Revenue Service (IRS). It ensures accurate tax compliance for both the employee and tax authorities.

The Role of the W-2 in Tax Filing

The W-2 form details an employee’s annual wages, tips, and other compensation, along with amounts withheld for federal income tax, Social Security tax, and Medicare tax. Employers must provide this statement to each employee by January 31st following the tax year. A copy is also sent to the Social Security Administration (SSA), which shares this information with the IRS.

This document allows the IRS to verify the income and tax withholding reported on an individual’s tax return. Without a W-2, taxpayers lack the information to complete their Form 1040, the primary document for filing federal income taxes. The W-2 ensures that the income an employer reports paying matches the income a taxpayer reports receiving.

IRS Detection and Initial Actions

The IRS uses automated systems to compare income reported by employers and other third parties, such as banks, with income taxpayers report on their federal tax returns. If a W-2 is omitted or income is underreported, the system flags a mismatch.

When a discrepancy is identified, the taxpayer receives a CP2000 notice, often called an Underreporter Inquiry. This notice is not an audit but a proposal to adjust the tax return based on missing or differing information. The CP2000 notice outlines amounts reported by third parties versus what the taxpayer filed, and it proposes changes to the tax liability, including any accrued interest.

Taxpayers receive these notices approximately 9 to 18 months after filing their original return. The notice provides a summary of proposed changes and explains how to respond, usually within 30 days, or 60 days if living outside the U.S. Addressing a CP2000 notice promptly is important, as ignoring it can lead to further complications and assessment of the proposed tax liability.

Steps to Correct an Omission

If a taxpayer realizes a W-2 was omitted or receives an IRS notice regarding underreported income, the main step is to amend the tax return. This correction is done using Form 1040-X, Amended U.S. Individual Income Tax Return. This form allows taxpayers to correct errors on a previously filed Form 1040.

To complete Form 1040-X, the taxpayer needs their original tax return and the omitted W-2. The form requires entering income, deductions, and credits as originally filed, detailing changes from the W-2, and calculating corrected amounts. Attach the omitted W-2 and any other relevant documentation to support the changes.

Taxpayers can file Form 1040-X electronically using tax filing software for recent tax years, though paper filing remains an option. If an IRS notice was received, filing an amended return with the correct information, including the omitted W-2, is the required response to resolve the discrepancy. The IRS advises responding to notices within a specified timeframe to avoid further actions.

Potential Financial Ramifications

Omitting a W-2 can lead to financial consequences, particularly if it results in an underpayment of tax. The IRS may impose an underpayment penalty if insufficient tax was paid through withholding or estimated tax payments throughout the year. This penalty is calculated based on the amount of underpayment, the period it remained unpaid, and quarterly interest rates set by the IRS.

In addition to underpayment penalties, interest charges accrue on any unpaid tax from the original due date of the return until payment is made in full. This interest is compounded daily and is set quarterly at the federal short-term rate plus three percentage points. If the omission leads to a larger unaddressed tax liability, failure-to-file or failure-to-pay penalties may also apply.