What Happens If I Forgot to Add a W-2?

Forgetting to include a Form W-2 on a tax return is a correctable error. It is best to address the mistake proactively rather than waiting for tax authorities to discover it. Taking the proper steps will ensure your tax record is accurate and you remain in good standing.

IRS Discovery and Potential Consequences

If you do not correct a return after omitting a W-2, the Internal Revenue Service will likely discover the error. The IRS uses an automated system to cross-reference the income on your tax return with the information it receives from employers, like Form W-2. When this system detects a mismatch, such as wages reported by an employer that are not on your return, it flags your account for review.

If the IRS confirms that income was unreported, the agency will mail a CP2000 notice. A CP2000 is not a formal audit, but a proposal to adjust your income, tax, and credits based on the information the IRS has. The notice details the missing W-2 information and calculates the proposed additional tax you owe.

Failing to respond to the CP2000 notice can lead to further issues. If the IRS does not hear from you by the deadline, it will issue a Statutory Notice of Deficiency, a formal determination that you owe the additional tax. The unpaid tax will accrue interest from the original filing deadline, and the IRS may also assess an accuracy-related penalty of 20% of the underpaid tax.

Preparing to File an Amended Return

To correct the omission of a W-2, you must file an amended tax return. First, gather the forgotten W-2, a copy of your originally filed Form 1040, and any related schedules affected by the change in income. An increase in income could alter your eligibility for certain tax credits or deductions.

The primary document for this process is Form 1040-X, Amended U.S. Individual Income Tax Return. This form is used to correct errors on a previously filed return. You must use Form 1040-X because you are changing the financial figures you originally reported, not just submitting a missing document for income you already included.

Form 1040-X uses a three-column format. In Column A, “Original amount,” you enter the figures from your initial return. In Column C, “Correct amount,” you report the updated figures after including the income from the forgotten W-2. This requires recalculating your total wages, adjusted gross income (AGI), and tax liability.

Column B, “Net change,” is the mathematical difference between Columns A and C. For example, if original wages were $50,000 and corrected wages are $60,000, the net change is $10,000. In Part III, “Explanation of Changes,” you must provide a concise statement explaining the amendment, such as, “To report wages and withholding from a W-2 omitted from the original return.”

How to File Your Amended Federal Return

You can file Form 1040-X electronically for recent tax years. If amending an older return or if you originally filed on paper, you must mail a paper copy of Form 1040-X. For paper filing, mail the return to the IRS service center listed in the form’s instructions.

When filing, attach copies of any new or changed forms or schedules, including the forgotten W-2, to the back of your signed Form 1040-X. Also include copies of any other forms that changed due to the new income information. Do not attach a copy of your original Form 1040.

Allow 8 to 12 weeks or more for your Form 1040-X to be processed. You can check the status online using the IRS’s “Where’s My Amended Return?” tool about three weeks after filing. If you owe additional tax, pay it as soon as possible to minimize interest and penalties. You can pay on the IRS website, by phone, or by mailing a check with the payment voucher.

Correcting Your State Tax Return

Amending your federal return will likely require you to amend your state tax return. State income tax calculations often begin with the federal adjusted gross income (AGI), so a change to your federal AGI affects your state tax liability. Ignoring the state filing can lead to separate notices, penalties, and interest from your state’s tax agency.

It is advisable to wait until the IRS has accepted your federal amended return before filing your amended state return. This ensures the figures on your state amendment match the corrected federal figures. Check with your state’s tax agency for its specific requirements, as some have deadlines for filing an amendment after a federal change.

Each state has its own forms and procedures for amending a return, and you cannot use the federal Form 1040-X. Visit the website for your state’s department of revenue to find the correct form, instructions, and mailing address.