How to figure what I actually earned with an incorrect W-2?
January 30, 2010 9:30 AM   Subscribe

My W-2 is a work of pure fiction. Do I need an accountant or a tax attorney?

Without giving a lot of identifying info, I work at a private organization that has been going through a rough period financially. On the occasions when we’ve gotten paid, it is usually via an “emergency check” that doesn’t include any information regarding regular (gross) pay or deductions. I started here late in the year and only worked a small portion of 2009 during which time I received only one standard payroll paycheck. Basing my calculations off of that check and checking it against calculations on the paycheck city website to make sure that the net amount was close to the mark, I believe that my W-2 is about $4000-$5000 over my true gross earnings for 2009. I was told to let them know if it was incorrect, so I think that they are aware that there are problems and are expecting complaints.

I would like to have someone with some expertise in this area help me determine what I actually was paid since, although I have my check stubs, most do not include any information about my gross pay. We (myself and some of my colleagues) also suspect that the organization is not up to date with employees' federal, state, and local taxes, as well as other deductions. This is why I wonder if it would be better to consult with a tax attorney?

Other relevant info: I don’t have a lot of money to spend on either a lawyer or an accountant but do think that it is worth throwing to $250 at this problem for expert advice. Also, previously my taxes have been straightforward enough that I have always filed myself, which is why I don’t have an accountant. I know that location may play a role in any advice that anyone answering is willing to give, but I’m trying to keep this as unidentifiable as possible. I have a throwaway email address for anyone who is wants to help but needs more info:
posted by anonymous to Work & Money (8 answers total)
Why don't you start by going back to the issuer and simply asking for them to explain how they came up with every figure on the W-2? This may result in their re-calculating it and immediately re-issuing an amended W-2. If you are not satisfied with their response, then you can go to the IRS web page and research their response to "What if I disagree with my W-2" info or just Google that phrase. If you are still uncomfortable, see if there is a free tax clinic in your city and ask them for assistance. Lastly, seek advice from a tax accountant. By working up these steps you may find what you want to know without spending any (or a lot of) money.
posted by Old Geezer at 9:54 AM on January 30, 2010

Ouch, if they didn't pay your withholding and other tax obligations you may be in for a nastier surprise than expected. Those taxes have to be paid and if the employer screwed up, well, they're still owed and YOU will have to pay them (on time or suffer added penalties). The good part is you're working on this NOW. Get it all sorted out ahead of time not at the last minute. It would seem like any decent tax accountant could help you sort out this mess, it wouldn't require the typically more expensive tax attorney (that's what the company is going to need).
posted by wkearney99 at 10:52 AM on January 30, 2010

IANAL, but I'm pretty sure that if you were told the taxes were withheld, they become the debt of the employer to the IRS, not your debt. The IRS is aggressive about collecting those things. I had a client at one point who got their bank account garnished because they'd decided for awhile that making their 941 payments was optional. So far as I am aware, none of their employees had to pay their own taxes in the interim.

Ask your employer for how they came up with those figures, give them the amounts you have, try to work it out through them first. Then get a CPA. You shouldn't need a lawyer, at least to start with, and if you really do they can refer you to one who they're comfortable working with, and CPA rates are generally lower. They can show you how to handle the incorrect W-2 with the IRS. There are procedures in place for it.
posted by larkspur at 11:39 AM on January 30, 2010

It's no big deal - you may owe some extra money, but you can work out a payment plan; you won't go to jail and the IRS is not going to come and get you etc.

Talk to an accountant, preferably one who services small businesses as their own core business. Don't talk to a bookkeeper or HR Block.

These sorts of accountants are accustomed to unraveling these sorts of messes, and often have formed relationships with the IRS - they can pick up the phone and make things better, and they can easily identify who should have been paying what.

It might cost you between $300 and $500, but it will be money well spent.

And remember, you owe the tax anyway.
posted by KokuRyu at 12:12 PM on January 30, 2010

From my own personal experience, I would recommend talking to an accountant and then talk to your employer.
posted by KokuRyu at 12:13 PM on January 30, 2010

I'm pretty sure that if you were told the taxes were withheld, they become the debt of the employer to the IRS

If anonymous wasn't told in writing (you know, like on a paystub), then anonymous wasn't told.
posted by toxic at 3:08 PM on January 30, 2010

Talk to a CPA first. Not an "accountant" or an "Fill in the blank branded" tax filer. Certified Public Accountant who would be more familiar with small employer documentation.

Go through your deposit slips/records (online!) through your bank ASAP for the whole year and work up your own numbers on what you think you earned/owe.

And as another poster said, sit down with the company and ask them to explain point by point where they got their numbers (without referencing your own calculations).

I've run into this; but I didn't find out until a couple of years LATER that some monies had been ... incorrectly not deposited with the appropriate federal agencies (thankfully they at least got the IRS part right). I simply called up the SSA and whoever was responsible for the rest of it at the time, explained the situation, and set them after the company. About a year later I got a corrected Social Security statement with out two years worth of $0 earnings in listed.
posted by tilde at 9:54 PM on January 30, 2010

Your employer is responsible for keeping proper records as well as withholding taxes from your wages and salaries. Your w2 should show the gross amount received, taxes withheld, social insurance etc and the net amount received in 2009. Take the w2 and the proof of amount you actually received and have them issue a revised w2. Based on the revision you can submit your 2009 return with IRS. Your employer should also be submitting a copy in their annual returns to IRS.
This is based on the fact that you are an employee and not a contractor. 

Just some further information If your employer hasn't deducted any tax from your salary you are still required to pay the tax on that income. You have the right to approach your employer and tell them they must withhold the appropriate taxes on each payment. In this case your employer will be in breach of their responsibilities with IRS and will most likely be fined.
posted by taxpayerlotus at 2:59 PM on January 31, 2010

« Older Should I donate breastmilk to Haiti?   |   How does this dame learn to be classy? Newer »
This thread is closed to new comments.