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Ask Lane Your Own Question
Category: Tax
Satisfied Customers: 12213
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My employer overpaid me for the early part of 2012 when I was

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My employer overpaid me for the early part of 2012 when I was on maternity leave. I found another position with the same employer in June after returning. We agreed to repay the over-payment. The first check I wrote to the employer did not clear. Then the employer started to deduct from each of my paychecks. By early December, it was clear that the deduction will last into 2013. I called the HR and agreed to write one check to repay the entire over-payment. HR cashed the check but failed to inform accounting to reversed my deductions from my paycheck between June and December. I received the reimbursement of the deduction in mid-January 2013. As a result, my employer issued a W-2 showing my earning in 2012 about $42,000 less than what it should be. Now I will have have much higher reported income for 2013 and thus pay a lot more tax due higher income bracket. If the deducted portion of my income were not shifted from 2012 to 2013, I would have better tax rates. I communicated with HR many times over this. In the end, they agreed that they have made a mistake and they said it was a short notice before the year end. Since the tax year has close, there is nothing they can do to change the W-2. Essentially, they are saying tough luck even though their mistake cost me money. My question is: Did the HR tell me the truth that there is nothing to they can do after the tax year is closed? And do I have any means to hold my employer responsible for the extra income tax I would have to pay as a result of this mistake?

Lane :


Lane :

(1) The problem MAY be getting them to admit (to anyone else) what they've told you... that this WAS a mistake, but (2) they are notshooting straight with you regarding getting a corrected W-2 ... there is a specific process for this ... (the form used is a W-2 see this):

Form W-2c - Internal Revenue Service

Lane :

From there:

Lane :

Question: I received an incorrect W-2 form. I can't get my former employer to issue a corrected W-2. What should I do?


If your attempts to have an incorrect Form W-2 (PDF) corrected by your employer are unsuccessful and it is after February 14, contact the IRS toll-free at(NNN) NNN-NNNNto request that an IRS representative initiate a Form W-2 complaint.

  • child">A letter will be sent to the employer requesting that they furnish a corrected Form W-2 to you within ten days. The letter advises the employer of their responsibilities to provide a correct Form W-2 and of the penalties for failure to do so.

  • You will be sent a letter that provides instructions and Form 4852 (PDF), Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. The Form 4852 may be used in the event that the employer does not provide you with the corrected Form W-2 in time to file your tax return.

Lane :

When speaking with IRS,if I were you, I would mention that the H-R department cited "IRS regulations" as the reason that "that there is nothing to they can do after the tax year is closed." ... only two possibilities for that statement; they don't understand or they lied

Lane :


Lane :

I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)

Lane :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.

HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Lane :

Please let me know if you have any questions at all ...


Hi Cheyenne,

... just checking back in, as I never saw you come into the chat.

As you can see they've really not been straight with you. There IS, not only a process for correcting, BUT ALSO the process for making them get it right.

If you DO have any questions at all, please let me know.


Customer: replied 3 years ago.

I just sent a follow up, not sure if you saw it.

Customer: replied 3 years ago.

Thanks, XXXXX XXXXX issue is that HR insisted that the W-2 was done correctly. At least, their math was correct. The problem is that HR subtracted about $42,000 deductions from my 2012 earnings and added $42,000 (because of the refund check I received in mid January) to my 2013 earnings. So their math is squared away at the top level. This shift implied that I would have worked for 2 months in 2012 at my pay scale in 2012 instead of the actual 7 months. Their argument is that I received all the correct compensation down to the penny. My argument is that due to their reporting mistake, I will pay several thousand dollars more income tax. Moreover, my earnings should equate to 7-month work whether they deduct my paycheck or not. Since the over-payment was resolved in 2012, it did not appear in the W-2 at all. HR just issued me a W-2 of my gross earnings minus the deductions. They insist that the deductions are correct and should stay in 2012 and the reimbursement in 2013 should count as 2013 earnings. If I contact the IRS, I want to know whether their argument has more merits or mine.

NO, they are trying to apply the doctrine CONSTRUCTIVE receipt in a very simplistic/administrative fashion, which the IRS follows for all cash basis taxpayers (which is what you are). It says the following.

For federal tax purposes, the doctrine of constructive receipt is used to determine when a cash-basis taxpayer has received gross income (1) A taxpayer is subject to tax in the current year if he or she has unfettered control in determining when items of income will or should be paid. (2) However, unlike actual receipt, constructive receipt does not require physical possession of the item of income in question.

(That's what constructive means, you had it even though you didn't physically have it)

1. Samuel A. Donaldson, Federal Income Taxation of Individuals: Cases, Problems and Materials, 353 (2nd Ed. 2007).

2. Treas. Reg. § 1.451-2(a).

So you see that the argument has two sides... You were completely entitled to the dollars in the earlier year, but the check date was in 2013, meaning you didn't have unfettered control.

Where you see constructive receipt come up a lot is where folks who get a paycheck after the first of the year still have to pay taxes on those dollars for the previous year, because the check date was for December (even though they had not physically received the dollars, IS will say that they CONSTRUCTIVELY received them.

Your argument here will need to turn on the fact that even though, ADMINISTRATIVELY, the check date is typically used to determine that $ are received, constructively, in the previous year rather than the current year (again, typically used to KEEP people from deferring the income - and tax on it - into the next year) ... You were entitled to those dollars in the year that the work was done, as matter or both your contract (work for money) and ethically, as well.

They are relying on an administrative interpretation of constructive receipt. You will need to go deeper and use the LEGAL argument that says, the money was your property (owed to you as any accounts receivable would be , counted as an asset) and should have been paid in 2012.

You'll need to turn the constructive receipt on it's ear a little and say that in THIS case the date on the check isn't the issue, its the fact that the work was done in 2012 and you were entitled to the pay in 2012.

A TAX administrator will say (from a purely procedural standpoint) that if the check was dated 2013, the money was constructively received in 2013.. "that's the way we do it."

A tax attorney will say that, here, the check date isn't the accurate way to determine when the income became your property (and legally income IS property) .. "the income became your property when you did the work, and the company made a mistake in not paying as they should have ... a mistake to which they have admitted."

You want to get anything you can in writing.. emails, letters, etc. with the company (or it's agents... HR) stating that this is compensation for work done in 2012.

Lane and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

Thanks, XXXXX XXXXX very helpful.