Employer reported Relocation income from previous year in next year W2

[stridder]

What is the name of your state? California

Hi,
I am former employee.
Former Employer reported Relocation income/expense from previous year (paid in Nov/Dec) in W2 for next year, i.e. not in the year Relocation income/expense was paid to me.
Employer did NOT report relocation in W-2 for same year relocation was paid, but instead did fake "voluntary deduction" in next year paycheck, and thus (significantly) increased my taxable amount for next year by relocation amount.
I did NOT AUTHORIZE or knew about this fake "voluntary deduction" (there's 2 paychecks for the same period).
This is exactly what paycheck said.
Paycheck with clearly shows that ZERO was paid, the whole purpose of this trick for employer was to report to IRS income they paid previous year, but failed to report in previos year when it was paid, and thus increase my taxable income.
I contacted employer and IRS sent employer a letter asking for corrected W2, however no effect yet (employer claims W2 is correct).

Questions:
1) What law or IRS publication governs period/year in which relocation expense should be reported?
2) What law or IRS publication may be relevant to reporting relocation as "voluntary deduction"?
3) If such "voluntary deduction" is unlawful, is there a law or IRS publication that more or less clearly states that such deduction cannot be taxable?

The main issue taxable income significantly increased.
So that discussion is more fruitful, I suggest stating opinions with reference to specific law or IRS publications.
Thank you!

 

[adjusterjack]

Nah, we're not going to look up tax laws and publications for you. You can do that yourself on the IRS website.

This is as much your fault as your employer's. You should have included the income in your taxes return for the year you received it, with or without a W-2. You didn't. And you had plenty of time between Jan and Apr of the following year to hound your employer for a W-2. You didn't.

Anyway, talk to a tax pro about how you might fix this.

 

[stridder]

You should have included the income in your taxes return for the year you received it, with or without a W-2.

I did include it for the year I received it (even though its not reported on W2).

You didn't.

Whats in my post made you to this conclusion???

 

[stridder]

And you had plenty of time between Jan and Apr of the following year to hound your employer for a W-2. You didn't.

Another telepathy?
I have W2 for the following year, it just includes fake voluntary deduction income that I did not noticed at that time (few experience). Everything is described in 1st post.

 

[Taxing Matters]

Questions:
1) What law or IRS publication governs period/year in which relocation expense should be reported?

As a cash basis taxpayer, you'd report the relocation reimbursement income on your return in the year the employer the paid it. See page 8 of IRS Publication 538. You must do that regardless of whether the employer gets the W-2 right, though of course getting the corrected W-2 would mean less hassle for you.

2) What law or IRS publication may be relevant to reporting relocation as "voluntary deduction"?
3) If such "voluntary deduction" is unlawful, is there a law or IRS publication that more or less clearly states that such deduction cannot be taxable?

It's not clear exactly what the employer is saying with this "voluntary deduction." That doesn't make any sense. What exactly is he trying to do here? In any event, if you were actually paid by the employer in 2021 for moving expenses incurred in 2021, that goes on your 2021 W-2 and your 2021 Form 1040.

 

[stridder]

As a cash basis taxpayer, you'd report the relocation reimbursement income on your return in the year the employer the paid it. See page 8 of IRS Publication 538.

Sure, will read it, thank you very much!

It's not clear exactly what the employer is saying with this "voluntary deduction." That doesn't make any sense. What exactly is he trying to do here?

Employer confirmed that this "voluntary deduction." is for relocation.
There's separate division (if not 3rd party company, not sure) that pays for relocation, and I suspect that division that paid relocation communicated with division that deals with taxes late.
Employer literally says since relocation was paid late in the previous year, therefore it was to late to report it (to IRS), and its OK to report it next year through September next year, therefore W2 is correct.
Employer reported it next year via "voluntary deduction." and artificially increasing FIT withhold and state tax withhold in the next year payslip.
Not sure why employer didn't issue corrected W2 for the year relocation was paid - may be there are penalties they are trying to avoid by such trick.
Let me know if smth isn't clear yet.

 

[stridder]

You must do that regardless of whether the employer gets the W-2 right, though of course getting the corrected W-2 would mean less hassle for you.

Yes, I included relocation income in the previous year it was paid. Thus I ended up paying tax for same relocation income twice (in the year it was paid, and again in next year tax).

 

[Zigner]

Yes, I included relocation income in the previous year it was paid. Thus I ended up paying tax for same relocation income twice (in the year it was paid, and again in next year tax).

How did you pay tax twice? The required employer withholding didn't occur in the first year, and you didn't have to pay taxes on your return for the second year.

 

[LdiJ]

How did you pay tax twice? The required employer withholding didn't occur in the first year, and you didn't have to pay taxes on your return for the second year.

I would be a serious battle with the IRS to not pay taxes on money reported on a W2. What would happen is what happened in this case. The IRS would insist on a corrected W2, and if the employer refused to correct it, the IRS might not budge.

 

[Zigner]

I would be a serious battle with the IRS to not pay taxes on money reported on a W2. What would happen is what happened in this case. The IRS would insist on a corrected W2, and if the employer refused to correct it, the IRS might not budge.

Then the OP can file an amended return for the prior year...

 

[LdiJ]

Then the OP can file an amended return for the prior year...

That is a possible work around, although not actually the correct way to do things.

 

[stridder]

How did you pay tax twice? The required employer withholding didn't occur in the first year, and you didn't have to pay taxes on your return for the second year.

In the first year I included relocation in taxable income myself, cause it was obvious that its not included in W2.
In 2nd year employer artificially increased taxable income by exact relocation expense amount (paid in 1st year) + by tax withholding (its not 100% clear what year tax withholding occurred).
Without corrected W-2 I cannot reduce income myself (at least I don't know if this is legal).
IRS records don't show when employer paid tax for relocation.

 

[stridder]

Then the OP can file an amended return for the prior year...

Yeah, I'm thinking about amended return for the prior year, I will still loose money cause income for the prior year is way lower.

That is a possible work around, although not actually the correct way to do things.

Why you think its not the correct way?
Don't like it myself, but don't know what else I can do.

 

[stridder]

I would be a serious battle with the IRS to not pay taxes on money reported on a W2. What would happen is what happened in this case. The IRS would insist on a corrected W2, and if the employer refused to correct it, the IRS might not budge.

IRS sent letter to employer, and says if employer doesn't issue corrected W2 to fill form 4852.
But instructions for form 4852 (W2 substitute) are just 1 page - from instructions its completely unclear if I should include fake "voluntary deduction" in income field for following year (penalties for wrongfull 4852 form are very severe).

 

[LdiJ]

IRS sent letter to employer, and says if employer doesn't issue corrected W2 to fill form 4852.
But instructions for form 4852 (W2 substitute) are just 1 page - from instructions its completely unclear if I should include fake "voluntary deduction" in income field for following year (penalties for wrongfull 4852 form are very severe).

If you were told to fill out form 4852 then you are to fill it out with the same information your employer would use to fill out a corrected W2. However, that is something that I strongly recommend that you get a local tax professional to help you fill out. The more you tell us about your situation the more I believe that you should not be attempting to do this on your own.