FORMER employer will not issue corrected W2. Wages differ by >$300; state tax differs by approx. $500. May I prepare my return based on paystub data?

[rjs · Accepted solution]

You can file your tax return with a Substitute W-2, Form 4852. On the screen in TurboTax where you enter your W-2 information, enter the correct information, not the incorrect information that is on your W-2. After you click Continue on the W-2 entry screen, you will get a screen that says "Do any of these uncommon situations apply to this W-2?" (There might be some other questions about your W-2 information before you get to this screen.) One of the boxes says "Substitute form - I didn't get a W-2 from my employer and need to complete a substitute form." Put a check in that box (even though that's not exactly your situation) and click Continue. The next screen asks if you want to complete Form 4852. Click Yes. Proceed through the screens, entering the requested information to complete Form 4852.

[Carl]

That would more than likely, be considered filing a fraudulent return. The IRS already has a copy of the W-2 sent to them by the employer that issued it. It's not common for the W-2 to not match the final paystub. If that's your only reasoning, then more than likely you're going to lose on an audit.

[rjs]

@Carl  I agree that it's not common, but it does happen that an employer issues an incorrect W-2 and refuses to correct it. That's why the IRS has a form to deal with the situation. One of the reasons to file Form 4852 is "an employer or payer has issued an incorrect Form W-2." See "Purpose of form" in the instructions for Form 4852. Also see the following links on the IRS web site.

<a rel="nofollow" target="_blank" href="http://www.irs.gov/taxtopics/tc154.html">http://www.irs.gov/taxtopics/tc154.html</a>

<a rel="nofollow" target="_blank" href="https://www.irs.gov/faqs/irs-procedures/w-2-additional-incorrect-lost-non-receipt-omitted/w-2-additi...>

If the IRS says that you can file Form 4852 for an incorrect W-2, it certainly cannot be considered fraudulent.

[Carl]

Didn't see that. thanks. But it's important that one be aware it's not all that uncommon at all, for the W-2 and the final paystub to not agree. More than 95% of the time the W-2 is correct. Another issue is that for many, the paystub may not break down the taxes withheld for the entire year, and many also don't show amounts deferred to other things such as an HSA or retirement, which can (and usually will) cause a difference between what is on the paystub and what's on the W-2.

[Carl]

No you can't. It is rare for your W-2 to match your paystubs "exactly". You have to report the w-2 exactly as printed. Doing otherwise will get you audited about 24-36 months after you file.