@marcuscato wrote:
Does this mean I cannot use the W2C to claim the difference with IRS? By the way I need to claim the difference in Federal, NY state, NY City taxes, SSN and Medicare. I have asked the employer to refund me the difference in SSN and Medicare and they said they will if I sign a form that says I won't claim that part from IRS, which I am considering. I am yet to see the form.
You are then out 3 types of taxes; federal income, state income, and employment taxes (social security and Medicare.). (4 types of tax if we include NYC, but that will go on the state tax form.). Normally, you recover the state and federal income tax with a claim of right on your income tax return, and you recover the social security and medicare tax by filing form 853 separate from your tax return.
The only thing the company can legally do is change the social security and medicare withholding. That's boxes 3-6. They can't legally change your box 1 or box 16 taxable wages because those boxes must show what you were actually paid during the year and those amounts did not change.
If they reduce your box 3 and 5 wages and your box 4 and box 6 social security and Medicare withholding, then they should pay you back the difference. Otherwise, they are telling the social security administration to credit you for less money than was paid into the system. If the company refunds the excess social security and medicare withholding, then it's fine to sign a form saying you won't claim the same refund from the IRS, because you won't need to, you will have been refunded the money by your ex-employer. (And in fact, you can't file a claim on form 853 unless you include a letter from your company saying that they won't refund the excess social security and medicare.). So if the company issues a W-2 that adjusts boxes 3-6 only, and pays you a refund, that makes you whole on the issue of social security and medicare tax, and saves you having to file form 853. You will still need to file a claim of right on your 2021 income tax returns to take care of the federal, state and city income taxes.
If the company issues a W-2C for 2020 that changes box 1 and 16, that's a mistake on their part, and we can talk about that if it happens.
