My employer calculated the state income incorrectly on the W2 form

[malda]

Hi,

Because my employer didn't fully update my remote work status in the system, my W2 form says my CA income is smaller than the federal income, even though they should be equal. On the other hand, the CA income withheld is calculated assuming that they are equal. So I am a bit worried that the state tax agency might be confused. In this case, is it okay to file the CA tax return indicating there that my actual CA income is actually equal to the federal income (I remember they ask both the actual CA income and the CA income as shown on the W2 form)? Or is it safer to ask them to issue a W2C form?  They say it will take a week to 10 days to send it to me and the tax agencies so before the tax deadline...

[BillM223]

Are you worried about the value in box 16? Don't worry about it for your California return. It turns out that the CA state tax return doesn't use the value in box 16. Rather, the CA return starts with the federal return and then add some things and subtracts some things. It makes no difference to the CA state return what number in in box 16.

[malda]

Thank you for your reply! Yes, I also realize that Box 16 value on W2 form ends up not mattering in my CA part-year resident (I moved to MA last Sep) tax form (540NR form). But 540NR form's Box 12 asks for "Total California wages from your federal Form(s) W-2, box 16", even though for some reason it seems like it never gets used. So, I am wondering if the CA tax agency will think it's a bit odd that there is a discrepancy between Box 12 (CA income reported on W2) and Box 32 (CA adjusted gross income from Schedule CA (540NR), Part IV, line 1), and also the CA tax withheld shown on W2 is calculated assuming that my CA income is equal to my federal income, even though CA income shown on W2 is less than my federal income (they only updated my remote work status for withholding the CA tax but forgot to do so for calculating the CA income tax). @BillM223 or anyone else.

[AmyC]

CA wages and CA adjusted gross income do not have to match and frequently don't.

CA income tax is withheld all year and should be based on wages earned in CA. Stopping taxes while still calculating CA income is illogical.

The goal is to claim the correct CA income and pay the correct liability. You have paperwork of when you moved and the changes to your address, license, voting, etc to back you up. 

If CA asks, you are ready!