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Karen CPA
Karen CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2
Experience:  10 yrs as a tax consultant; Specialize in state and local tax issues and individual income tax.
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I live and work and the state of New Mexico. I am a dentist

Resolved Question:

I live and work and the state of New Mexico. I am a dentist working as an employee for a corporation. My question is the following:
I get paid on the 1st and the 15th of every month. When I received my paycheck for December 1st, 2008, I noticed that my paystub stated that I got a bonus for $4,030.00 which I never received. I talked to the office manager and she said it was a mistake and she would take care of it. When I got my W-2 in February, 2009, my C.P.A. - who is also the C.P.A. for the corporation - informed me that my W-2 indicated that I had received the bonus. After talking to the owner, my C.P.A. told me that it had been an error and that since he had already done the taxes for the corporation, it would be easier to fix it in this year's taxes. Since my income was overstated by $4,030.00, what is the proper way of fixing the situation in this year's taxes.
Thank you, XXXXX XXXXX
Submitted: 7 years ago.
Category: Tax
Expert:  Karen CPA replied 7 years ago.
The "proper" way to fix would have been to amend the 2008 taxes for the corporation and have them issue you a revised W-2. Since that is not what happened. I believe the fix your CPA is referring to would be to understate your income for 2009 by the same amount. This may not be an exact wash, though, after you account for differences in the tax law and specifics of your return.
Customer: replied 7 years ago.
I'm sorry, but could you elaborate on the last part of your answer, where you stated: "This may not be an exact....."
Thank you, XXXXX XXXXX
Expert:  Karen CPA replied 7 years ago.
Sure, no problem. What I'm referring to is the tax rate that applies to the $4,030. If your income level is approximately the same in 2009 as it was in 2008, this probably is not an issue. If for some reason, you were in a high tax bracket last year, but this year your overall income is a lot lower and you are taxed at a much lower tax rate, then the tax you paid last year on that $4,030 would be higher than the amount that you would've paid on that income this year. If your income level is fairly consistent with last year, this is probably not an issue. I was just trying to cover all the bases.

In addition, the tax brackets (or tax rate applied based on income level) are changing a little from 2008 to 2009. So, if your income level happened to be right on the threshhold, that $4,030 could have been taxed at a higher tax than it would have this year. Again, I think if there is any affect by this, it would be very minimal, unless your income is significantly lower this year than last year.
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