W-2 Withholding Tax Year

[jimbabwe]

I wrote a very long, detailed question, which this stupid computer lost. So, here's the quick version:

Notwithstanding certain Section 409 deferred compensation, can federal withholding taxes taken out of my January, 2009, pay (deposited into my account in January, 2009), be reported (included in) Box 2 of my 2008 W-2?

Or, taken another way, can federal withholding taxes taken out of my January, 2008, pay (deposited into my account in January, 2008) NOT be reported in Box 2 of my 2008 W-2?

My company thinks that because the tax taken out in January is based on calculations of tax withholding for money PAID in December of the previous year, it should be included in the previous year's W-2.

I have plenty of references supporting the fact that WAGES PAID between January 1, 2008, and December 31, 2008, should be on 2008's W-2, but nothing CLEAR regarding taxes withheld.

Please, if you can, provide supporting links or text.

Thank you!

 

[LdiJ]

I wrote a very long, detailed question, which this stupid computer lost. So, here's the quick version:

Notwithstanding certain Section 409 deferred compensation, can federal withholding taxes taken out of my January, 2009, pay (deposited into my account in January, 2009), be reported (included in) Box 2 of my 2008 W-2?

Or, taken another way, can federal withholding taxes taken out of my January, 2008, pay (deposited into my account in January, 2008) NOT be reported in Box 2 of my 2008 W-2?

My company thinks that because the tax taken out in January is based on calculations of tax withholding for money PAID in December of the previous year, it should be included in the previous year's W-2.

I have plenty of references supporting the fact that WAGES PAID between January 1, 2008, and December 31, 2008, should be on 2008's W-2, but nothing CLEAR regarding taxes withheld.

Please, if you can, provide supporting links or text.

Thank you!

I am a little confused...but only pay received during a calendar year should be reported on a W2, and the only withholdings that should be reported are the withholdings that correspond directly to the pay.

However, if the employer sends out a payroll on December 31st, 2007 for direct deposit, and for some reason your bank doesn't credit you until January 2nd 2008 (since January 1st is a holiday) the employer is going to put that on your W2 for 2007.

However, if an employer closes a pay period on December 26th 2007 (for example) but doesn't issue the checks or direct deposits at all until January 2nd 2008, then the pay and corresponding withholdings should NOT be on the W2 for 2007.

 

[jimbabwe]

I understand how pay should be reported, but the question is regarding withholding.

You use the statement "withholdings that correspond directly to the pay."

When my employer calculates the WITHHOLDING required on my December, 2007, pay it deducts that amount from my JANUARY, 2008, pay, but reports it on my 2007 W-2.

Under the constructive receipt, and cash basis accounting method, any pay received in 2008 should be included only on the 2008 W-2.

Where does it say that same thing for withholding?

Your statement, which uses the word "corresponding," implies that the tax deducted from the paycheck received in January should be included on the previous year's W-2, since it CORRESPONDS to the pay RECEIVED in December. If that's what you mean, I disagree.

I am trying to find convincing documentation stating one way or the other. I hope someone can help with that.

Thanks!

 

[LdiJ]

I understand how pay should be reported, but the question is regarding withholding.

You use the statement "withholdings that correspond directly to the pay."

When my employer calculates the WITHHOLDING required on my December, 2007, pay it deducts that amount from my JANUARY, 2008, pay, but reports it on my 2007 W-2.

Under the constructive receipt, and cash basis accounting method, any pay received in 2008 should be included only on the 2008 W-2.

Where does it say that same thing for withholding?

Your statement, which uses the word "corresponding," implies that the tax deducted from the paycheck received in January should be included on the previous year's W-2, since it CORRESPONDS to the pay RECEIVED in December. If that's what you mean, I disagree.

I am trying to find convincing documentation stating one way or the other. I hope someone can help with that.

Thanks!

Let me put this in simpler terms:

You receive a paycheck at the end of December for the pay period of 12/10 to 12/24. Taxes are withheld from that pay. The income AND the taxes withheld for that period should be reported on the SAME W2. The income AND taxes for that period are also reported on the same paycheck as well, there is no "lag" as you seem to be impling. An employer cannot separate the income and withholding for the same period.

As to the year in which the income and taxes are reported, that depends on constructive receipt. Traditionally, that corresponds to the date when the check is issued to the employee...or rather the date on the check itself.

If you are implying that your employer is deducting withholding for one pay period, from the pay of the following pay period, then you are either mistaken, or your employer is doing payroll wrong, which is highly unlikely.

Now, if your employer gave you a Christmas bonus, without making deductions, and then deducted the taxes for that from a later pay period, the employer basically gave you an advance on your pay, (a loan) and the pay and taxes belonged to the pay period where they appeared on the check.

If that is still not the answer that you are looking for, then you need to explain exactly what happened.

 

[jimbabwe]

Maybe I need to make this clearer.

I get paid once a month, on the 26th, by electronic deposit.

My employer is a non-US company, which, for some unknown reason (which we will not get into here), decides to withhold US taxes and issue W-2s.

The calculations to determine the amount I am to be paid on the 26th are completed around the 18th of the month. The company then sends this info (amount of my gross, taxable pay) to a payroll company in the US, which applies the calculations based on the number of my withholding allowances, to determine the amount of tax to be withheld. Due to my company's "logistical problems," the amount of tax to be withheld on a certain month's pay is not relayed back to my company until AFTER I've already been paid for that month. Therefore, the company deducts the withholding from the NEXT month's pay.

So, in January, the taxes which are deducted from my pay received on January 26th are the taxes which were CALCULATED to be withheld on the earnings PAID to me in December.

The company thinks that because the taxes DEDUCTED in January are BASED on DECEMBER'S salary payment, THOSE TAXES should be reported (and the company IS reporting them) on the previous year's W-2.

Yes, despite how unlikely you may think it is, the company IS doing it incorrectly.

I am trying to find something in black and white (not just someone's opinion, despite how educated it may be) which will CONFIRM that this is an incorrect method of REPORTING tax withholding.

I have determined that it IS acceptable, due to these "logistical problems," to withhold the tax one month later, but it should STILL be reported in the year it was withheld, not in the year on which it was calculated. Constructive receipt.

Where can I find (in the US CFR or IRS Code, or where ever) something, in black and white, stating that Box 2 of the W-2 should contain the sum of all tax WHICH WAS SUBTRACTED FROM PAYMENTS MADE BETWEEN JANUARY 1 AND DECEMBER 31?

I hope SOMEONE can find the answer, 'cause I've searched high and low, with no definitive luck.

Thanks.

 

[jimbabwe]

If you are implying that your employer is deducting withholding for one pay period, from the pay of the following pay period, then you are either mistaken, or your employer is doing payroll wrong, which is highly unlikely.QUOTE]

That's EXACTLY what I'm implying, and that's EXACTLY what is happening.

 

[irsos]

Maybe I need to make this clearer.

I get paid once a month, on the 26th, by electronic deposit.

My employer is a non-US company, which, for some unknown reason (which we will not get into here), decides to withhold US taxes and issue W-2s.

The calculations to determine the amount I am to be paid on the 26th are completed around the 18th of the month. The company then sends this info (amount of my gross, taxable pay) to a payroll company in the US, which applies the calculations based on the number of my withholding allowances, to determine the amount of tax to be withheld. Due to my company's "logistical problems," the amount of tax to be withheld on a certain month's pay is not relayed back to my company until AFTER I've already been paid for that month. Therefore, the company deducts the withholding from the NEXT month's pay.

So, in January, the taxes which are deducted from my pay received on January 26th are the taxes which were CALCULATED to be withheld on the earnings PAID to me in December.

The company thinks that because the taxes DEDUCTED in January are BASED on DECEMBER'S salary payment, THOSE TAXES should be reported (and the company IS reporting them) on the previous year's W-2.

Yes, despite how unlikely you may think it is, the company IS doing it incorrectly.

I am trying to find something in black and white (not just someone's opinion, despite how educated it may be) which will CONFIRM that this is an incorrect method of REPORTING tax withholding.

I have determined that it IS acceptable, due to these "logistical problems," to withhold the tax one month later, but it should STILL be reported in the year it was withheld, not in the year on which it was calculated. Constructive receipt.

Where can I find (in the US CFR or IRS Code, or where ever) something, in black and white, stating that Box 2 of the W-2 should contain the sum of all tax WHICH WAS SUBTRACTED FROM PAYMENTS MADE BETWEEN JANUARY 1 AND DECEMBER 31?

I hope SOMEONE can find the answer, 'cause I've searched high and low, with no definitive luck.

Thanks.

Try page nine of the instructions for the W-2.

 

[jimbabwe]

Do you really think I haven't already looked there?

"Box 2—Federal income tax withheld. Show the total federal income tax withheld from the employee’s wages for the year"

The unanswered argument is, "Are the taxes which are due on December 2007's pay, but which are not withheld until January, 2008, FOR the year 2007, or FOR the year 2008?"

The word "FOR" is a little ambiguous here. My company's argument is that the taxes withheld in January, 2008, are FOR the wages paid in December, 2007, due to what I stated earlier.

 

[irsos]

Do you really think I haven't already looked there?

"Box 2—Federal income tax withheld. Show the total federal income tax withheld from the employee’s wages for the year"

The unanswered argument is, "Are the taxes which are due on December 2007's pay, but which are not withheld until January, 2008, FOR the year 2007, or FOR the year 2008?"

The word "FOR" is a little ambiguous here. My company's argument is that the taxes withheld in January, 2008, are FOR the wages paid in December, 2007, due to what I stated earlier.

Wrong place jerk.

 

[LdiJ]

While I agree that your employer is doing it wrong, the company actually preparing and issuing the W2 is the payroll company, who has no idea that the employer is actually doing that. The payroll company's systems wouldn't even allow for the withholding to be deferred like that.

What also makes no sense, is if the payroll company is telling your employer, on the 18th or shortly afterwards, what your deductions should be, it seems logistically odd that the employer couldn't withhold from the proper paycheck.

What I think is likely happening, is that your employer is withholding the tax at the time that they pay it to the US government. Most likely they are a monthly remitter, and therefore it would be due the 15th of the following month...therefore that would make sense. Its also possible that they are forced to do it that way, due to the accounting rules/tax rules of their own country. It could also be quite possible that they would have to account for it on your 2008 W2 under the accounting rules of their own country as well.

You do realize that if its not included on your 2008 W2 that you will be underwithheld for 2008?...and that if you continue working for the company it will even out in the long term?..except on your last year of employment with them.

This may be an unwinable battle if the IRS rules are contrary to the accounting/tax rules of their country. They would naturally have to follow the accounting/tax rules of their own country.

 

[jimbabwe]

Now that I know who you are, Mike Wellman, of Houston, Texas, I hope you lose business for your childish and arrogant attitude. GROW UP MIKE WELLMAN.

Calling me a jerk for citing what you believe to be "the wrong place" is something a 10-year-old would do.

Plus, your advice is crap. You, a supposed professsional, can't even cite ANY documentation, like https://secure.ssa.gov/apps10/poms.NSF/lnx/0301401030, and other statements, which PROVE that the WAGES shown on the W-2 should be those PAID during the year.

I'll have to consult someone who knows something.

The accounting rules of my employer's country, of course, do not require them to provide me a US W-2.

I hope people that read this thread realize that they should never give you, MIKE WELLMAN, or your company, IRSOS. COM, their business.

 

[irsos]

I gave you the page and you came back citing another page saying that was not what you were looking for. The problem is, you lack the ability to understand the plain words that make the case you want to make. I cannot help that. Start by at least going to the right page. Here is a clue - figure out what cash basis means.