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Bonus received in 2019 but included on 2018 W-2

All,

 

Help is appreciated. My employer surprised me with a sizable bonus in 2019. Check dated 1/4/2019. Received and cashed in 2019. I'm grateful for this bonus. However, they added the bonus to the last pay period of 2018 and included this check amount in my 2018 W-2. In their mind, this was an "end of year" bonus and treated it as such. This bonus, when applied to 2018, pushes my AGI just beyond the amount that Health Care Marketplace financial assistance supports, and full cost of entire year of health plan becomes due. (I was working very hard all year to stay within AGI limits). Without this bonus, I gain a large tax refund. Many attempts to get amended 2018 W-2 from employer have failed. I'd like to have this bonus applied to 2019, the year I actually received it. Can I file an amended return for 2018 in any way? Do I need advice from a tax attorney? Just trying to get an idea of next steps. Thanks for any advice given here. Much Appreciated!

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6 Replies
BillM223
Expert Alumni

Bonus received in 2019 but included on 2018 W-2

Yes, sometimes employers do things, not realizing the negative effects it can have on employees.

 

In your case, because the check was dated 1/4/2019, you can make a good argument that you did not have "constructive use" of the money until 2019 (this is the usual way you determine to what year an income or expense item should belong).

 

Yes, if you want to dispute this (see below), you would need to amend your 2018 return.

 

However, you cannot use their W-2 to file the return you want. You will have to use form 4852 (see this IRS page). This is permitted when your employer will not give you a correct W-2.

 

At the bottom are the instructions inside TurboTax on how to enter the 4852. Note that you will enter your W-2 information as you believe it to be accurate (without the bonus amount), then check on the next screen that you want to do a substitute W-2.

 

You will need to explain why you have made this change (i.e., why the employer reported your W-2 incorrectly) and what you did about it (repeatedly contacted the employer who refused to correct the W-2).

 

Note that this will give you the return you expected, but there may be push-back down the road. The IRS may contact the employer for an explanation. So be sure you want to do this. But, like I said, you didn't have constructive use of the money in 2018 (indeed did you even know about the bonus in 2018?), so reporting the income in 2019 would be more in keeping with the spirit of the Tax Code.

 

If you get a letter from the IRS, you may want to consult with a local Enrolled Agent or CPA. This issue probably doesn't rise to the level of a tax attorney, although they could certainly handle it. Or you may want to talk to a local professional now, to advise you on how to proceed.

 

In any case, this is not tax advice to you, it is a description of how you would proceed if you want to contest this W-2.

 

 

 

 

"

Here's how to fill out Form 4852:

1. Visit the W-2 area of TurboTax and choose "Work on my W-2 now."
2. Enter the employer ID Number (EIN) if you know it. Leave it blank if you don't.
3. When we ask for your W-2 info, enter all the info that should be on your W-2 if you had actually received it. You can use your pay stubs to estimate your earnings and total taxes paid (federal, state and local). Because you don't have your actual W-2, you just need to use the best information you have available (pay stubs, bank statements, etc.) to fill out as much of the Form as possible. 
4. After you're done filling out your W-2 info, you will get to "Do any of these uncommon situations apply to this W-2?" Select the checkbox "Substitute form -- I didn't receive a W-2 from my employer and need to complete a substitute form."
5. Then we will ask you to confirm you want to complete form 4852. Select Yes if you are ready.
6. Next write out an explanation of how you figured out your wages and taxes paid (i.e. I used my last pay stub or my most recent bank statement).
7. Then describe the steps you took when you tried to get your W-2 from your employer, like I called my employer on (insert date).

"

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Bonus received in 2019 but included on 2018 W-2

Thanks for the reply and advice! Sent amended return w 4852.

I assume I'll also need to add a 4852 to 2019 return, adding the bonus to the 2019 W-2?

BillM223
Expert Alumni

Bonus received in 2019 but included on 2018 W-2

Yes, following this line of thinking, you would have to do the 4852 for 2019 as well, assuming that the employer still won't report the money in 2019.

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paul082172
Returning Member

Bonus received in 2019 but included on 2018 W-2

Yes include it   my I formation.  How much am I getting this timuñ 

paul082172
Returning Member

Bonus received in 2019 but included on 2018 W-2

Almost done

TomD8
Level 15

Bonus received in 2019 but included on 2018 W-2

@theactortony --  Just a tip:  If you have (or can get) a copy of the check dated 1/4/2019, that will strongly bolster your case with the IRS.  A paycheck dated in 2019 should have been included on a 2019 W-2.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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