Correcting W2s W2c

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Correcting W-2s(W -2c)

• Oregon Statewide Payroll Services

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Introduction

• W-2c
• This session provides assistance in requesting
  corrected W-2s (W-2c)
  
• Tools to provide guidance in processing a request
  for corrected W-2 (W-2c)

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Topics

• Why request a corrected W-2 (W-2c)
• When to request a corrected W-2 (W-2c)
• How to request a corrected W-2 (W-2c)

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Overview

• Payroll has a fiduciary responsibility to process
  and report correct wage and tax information for
  employees
  
• OSPS submits the tax payments, reconciles and
  reports quarterly and annual payroll tax reports
  to Oregon Dept. Revenue, IRS SSA
  
• Form W-2c is a tool to assist in maintaining
  correct payroll data for employees

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Why request a corrected W-2 (W-2c)

• Employees Wage and Tax information for a prior
  tax year is incorrect
  
• Incorrect SSN used on W-2
• Incorrect name or spelling of name
• Overpayment of wages in prior year repaid
• Taxable or non-taxable income reported
  incorrectly
  
• Employee redeems year end paycheck early i.e.
  check dated for 2008 redeemed in 2007
  
• System error in reporting wages and tax on W-2

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When to request a corrected W-2 (W-2c)

• As soon as you discover incorrect payroll data
  and verify the correct data
  
• Example Discover Employee overpaid for a prior
  tax year and you have recovered the funds from
  the employee. You should request a corrected W-2

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How to request a corrected W-2 (W-2c)

• Request for Corrected W-2 (W-2c) Form
• OSPS web site Forms, Other OSPS Service
  Requests, Corrected W-2s
  
• Tools
• Employees original W-2
• OSPA Screen prints (P090)
• Copies of method of payment for return of
  overpayment
  
• Pay register showing incorrect wage

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Where to Get More Information

• IRS Web Site (www.irs.gov)
• IRS Publication 15 (Circular E, Employers Tax
  Guide (available IRS web site)
  
• OSPS web site
• Services, Corrected W-2s
• Reference Manual, Recommended Practices, Taxes,
  Corrected W-2
  
• OSPS Staff

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Summary

• Request W2c when incorrect wage and tax
  information is discovered
  
• Verify and document correct data
• Submit request for corrected W2c to OSPS
  Accountant for processing and filing to all
  necessary tax entities
  
• Questions

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Example oneIncorrect Social Security Number
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Example TwoDependent Flex Amount Incorrect
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Example ThreeDomestic Partner Incorrect Amount
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Example FourHousing Allowance Taxed Incorrectly
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Example FiveSystem Entries Incorrect
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Example SixEmployee Cashed 2005 paycheck in
2004(2004 Corrected W-2)
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Example SevenEmployee cashed 2005 paycheck in
20042005 Corrected W-2)
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Example EightOverpayments
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Example 8.1.aRepayment Over Three
YearsCorrected W-2 After Each Year

• Employee worked for two agencies
• Year of overpayment (2005) Repaid 300.00
• Year 2 (2006) Repaid 1,800.00
• Year 3 (2007) Repaid 758.81 (not shown)
• Year 1 -- reduce taxable income, FICA, MEDR
  subject for 2005
  
• Year 2 3 reduce FICA MEDR subject for 2005

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Example 8.1.bSame EmployeeDifferent W-2c
Schedule

• W-2c in 2005 to reduce taxable income, FICA
  Subject, MEDR Subject for 300.00 repaid in 2005
  
• Only one additional W-2c issued after final
  payment made, even if crosses more than one tax
  year

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Example 8.2Year-end Overpayment

• Not repaid by December Run 1
• Hours backed out in Dec. Run 2
• Two Corrected W-2s for year of overpayment
• Year 1 Increase W-2 wages (755.86)
• Year 2 Reduce W-2 FICA subject wages when
  repaid (-755.86)

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Year 1
The best way is to fix these before year-end
closes. To do this you need to put whatever
caused the negative back on the system before
December Run 2. In Example 1, the employee had
no hours for December. Hours had been backed out
for November Run 2, therefore the 2006 wage has
been understated. The negative is still on the
system for 2007. Agency needs to reimburse OSPS
for NET amount owing (515.39) using Return of
Overpayment form. Employee still owes agency.
Set up A/R for the GROSS amount minus FICA/MEDR
tax 7.65. (755.86 57.82 698.04) Employee
pays Agency this amount. You can have them send
money to your agency or do a PANN. Do not send
OSPS money received from employee as your agency
has already cleared the negative. You do not make
any system entries other than a PANN on the P070
if that is how the overpayment is being repaid to
agency. In this example, a 2006 corrected W-2
will be needed to put back the WAGE paid in 2006
(1st corrected W-2). Then when the overpayment
is paid back by employee another 2006 corrected
W-2 will be needed to recover the FICA/MEDR to
make the agency whole.
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Overpayment spreadsheet to use when setting up A/R
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On November Run 2, hours were backed out causing
overpayment. Overpayment crossed tax year and
was not paid by December Run 1. November hours
paid in 2006 is 2006 wage, therefore needs to be
added to 2006 wage.
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Year 2 Repaid
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Example 8.3Year-end Overpayment

• Not repaid by December Run 1
• Hours backed out in Dec. Run 2
• Hours put back on with corrective for Nov
• Corrected W-2 when repaid

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In Example 2, the hours that caused the net pay
negative were put back on the system using a P050
adjustment or by the time entry screen for
November pay period before December Run 2. A
corrective for November and November P010 dates
need to be set for this to calc in 2006. Now the
YTD is correct for 2006. No corrected W-2 is
needed to correct WAGE for 2006. There is no
longer a net pay negative, so do not send money
to OSPS. Employee still owes agency. Set up A/R
for the GROSS amount minus FICA/MEDR tax 7.65.
Employee pays Agency this amount. Do not send
OSPS money received from employee. You do not
make any system entries other than a PANN on the
P070 if that is how the overpayment is being
repaid to agency. Then when the overpayment is
paid back by employee you will do a 2006
corrected W-2 to recover the FICA/MEDR tax to
make the agency whole.
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Employee paid back overpayment. Need to do
Corrected W-2. It is best to request copy of
original W-2.
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