What Happens If I Forgot to Add a W2 to My Taxes?

Forgetting to include a W2 form when filing taxes is a common oversight that can lead to unexpected tax consequences. Understanding how to address such an error is important for maintaining tax compliance and avoiding potential penalties.

Potential Consequences

Failing to report all income, including wages from a W2, can lead to underreporting your tax liability. The Internal Revenue Service (IRS) receives W2 forms directly from employers, allowing them to cross-reference reported income with taxpayer returns. When a discrepancy is detected, the IRS may send a notice, such as a CP2000, informing you of the mismatch and proposing changes to your tax liability.

If the underreported income results in additional tax owed, you could face penalties and interest charges. Penalties may include an accuracy-related penalty, which is typically 20% of the underpayment attributable to negligence or substantial understatement of income. An underpayment penalty may also apply if you paid less than 90% of the tax due for the current year or 100% of the tax shown on your prior year’s return. Interest accrues on any unpaid tax, including penalties, and is compounded daily, with rates for underpayments typically around 7% per year for individuals.

Preparing Your Amended Return

To correct a tax return where a W2 was omitted, you will need to file an amended U.S. Individual Income Tax Return, Form 1040-X. Before preparing this form, ensure you have the missing W2. If you do not have it, contact your employer to request a duplicate copy. If your employer cannot provide it, you can contact the IRS to request a wage and income transcript or use Form 4852, Substitute for Form W-2.

Form 1040-X requires you to provide three columns: the original amounts, the corrected amounts, and the net change. You will input the wages, withholdings, and other relevant data from the forgotten W2 into the “Corrected Amount” column, adjusting your total income, deductions, and credits as necessary. A clear explanation of the changes, specifically noting the inclusion of the omitted W2, must be provided in Part III of the form.

Changes to your federal tax return might also affect your state tax liability. If your state has an income tax, you will likely need to file a separate amended state tax return using the appropriate form for that state. This ensures consistency between your federal and state tax filings.

Submitting Your Amended Return

Once Form 1040-X is completed, you will need to submit it to the IRS. Amended returns are primarily filed by mail, though the IRS has expanded electronic filing for Form 1040-X for the current and two prior tax periods if the original return was e-filed. If mailing, the correct IRS address depends on your state of residence, so consult the IRS instructions for Form 1040-X or the IRS website for the specific mailing address.

Include a copy of the forgotten W2 and any other supporting documents that substantiate the changes you are making with your amended return. If the amendment results in additional tax owed, you should pay this amount to limit further penalties and interest. You can include payment with your mailed Form 1040-X or make an electronic payment through the IRS website.

What to Expect Afterward

After submitting your amended return, processing times can vary significantly and are generally longer than for original returns. The IRS advises allowing 8 to 12 weeks for processing, but it can sometimes take up to 16 weeks or even longer, especially during peak periods or if the return requires additional review. You can track the status of your amended return using the IRS’s “Where’s My Amended Return?” online tool or by calling their toll-free number, generally three weeks after submission.

If the IRS identifies the discrepancy before you file an amended return, you may receive a CP2000 notice. This notice is not an audit but an automated inquiry proposing changes to your tax return based on information received from third parties. It is important to respond promptly to a CP2000 notice, either by agreeing and paying any additional tax and penalties or by explaining why you disagree, often by filing a corrected return or providing supporting documentation. Proactively filing an amended return is advisable to avoid receiving such notices and to resolve the issue on your own terms.