W2 Discrepency

[Design655]

Okay, so I have unique(ish) tax situation that can't be easily covered in a random Google search for "tax advice". I'm not looking to get anyone in trouble (yet, anyway), so I'm going to keep details sparse for the time being:

I have been working for a small company in CT for about 3 1/2 years. Since the day I was hired, I have been signed up for direct deposit, and for a long while, that was how I received all of my pay (we use ADP for payroll). This last year and a half or so, my boss has begun paying me more and more with personal checks, which he lead myself (and the other employee that held the same position I did) to simply be a result of absent-mindedness. The paychecks were for the after tax amount, so I assumed that money for social security, medicare, et al were being deposited as they should be, and come tax season, everything would be in order.

Well...in looking at my W-2 (from ADP), it appears that only the amount paid via direct deposit is reflected—which makes sense. The amount covered in personal checks (over 3/4 of my annual pay) is not reflected anywhere, which again, makes sense. Now, I pointed this out to my employer, and he basically explained to me exactly what I just explained to you. That said, he has offered no solutions as to where that money went, or how I should go about reporting it in my taxes, other than to "talk to my accountant"...which I don't have, nor can I particularly afford.

Unfortunately, while I know something is wrong, and I know that that money needs to be reported (and who knows? Maybe it is on his end...but if that's the case, I'm the one who should be receiving the return on it), I do not have the knowledge of tax forms/tax law to walk into his office and tell him exactly what I need from him. My boss tends to avoid conflict, and if I don't ask him for something specific, he'll just continue to deflect.

What can I do?

(Thank you, so much, in advance, for any advice).

[ZTaxPro · Accepted solution]

I think that you should file form 8919 with code H. This form lets you pay the SS and Medicare taxes that you owe (just the employee half). I also thinks it tips off the IRS to audit your employer. If you are doing the work of an employee you are not responsible for the employer half of these taxes. If you are doing some work as an employee and some work as a contractor then he might be doing it right, but probably not. If anything he should also give you a 1099-MISC.

[Design655]

Thank you so much! This definitely gives me some things to look into!

[Design655]

All right, so I've had a few weeks to look into all this, and I have a few follow-up questions:

First and foremost, on from 8919, option H specifically says "I received a form W-2 AND a form 1099-MISC. What if I can't get my boss to fill out a 1099-MISC? I have every intention of explaining to him that that's what I need, but when push comes to shove, I can't ultimately make him do it. Should I still file this form with option 8, and just estimate the before-tax values (and by extension, the amounts withheld)? I'll remind you that my paychecks paid with personal checks absolutely had an amount withheld that would appear to be about what I would expect to be withheld for taxes, even though I personally have no record of where that money went, and I can't say for sure whether or not he does (though in light of all of this, I doubt it).

Second, if that is the thing to do, how can I estimate that missing amount with the most accuracy? There were numerous weeks last year in which I did not work a full 40 hours, and I, in my naivety, did not keep diligent records on my own hours. Using the single check I received after my raise (which conveniently listed the exact hours worked under the new rate), I can estimate that the entirety of my withholding comes out to about a little more than 22%. I notice that the form includes rates for both social security and medicare, but what about the the Fed income tax and the CT income tax (I work in CT...not sure if I mentioned that before). I can get a rough idea from by comparing the withholdings and the gross pay on my W2, but I feel like I have been told that the rates are not static and fluctuate mildly throughout the year...but I could be wrong on that(?)

Third, in looking over my W2 again, I'm realizing that, while there is still a vast discrepancy between my actual income for the year and the amount reported, that amount does not reflect the amount that I received from direct deposits (event though the W2 comes directly from ADP). By my estimates, my net pay form direct deposits was somewhere around $2900, which would make my gross pay around $3500... but my W2 reports a gross pay of $5824,  and based on the withholdings, the taxes equaled out to about 21%...but how do I even account for that? Ultimately my net pay seems to be right around where it should be, but I assumed that all the personal checks wouldn't be represented on the form from ADP, but...apparently at least some of them are?

Curious-er and curious-er...ultimately, right now, I just need to know what to ask my boss for, as he has a meeting with his accountant in a few days, and the more specific information I can provide, the more likely he'll be able to explain it in a way that his accountant can grasp.

Thank you in advance!