Companies sometimes make mistakes on your W-2.
When it comes to W-2s and 1099s, I must admit that — like most people — I just collect these forms and stuff them in a corner until it’s time to tackle those pesky taxes.
This, it would appear, is not always the best way to do things.
Greatland, a Grand Rapids, Mich.-based company that provides W-2 and 1099 products for small and medium-size businesses, warns of W-2 and 1099 filing pitfalls — or mistakes that can be made by companies preparing these forms. CPAs and other tax experts tell me that they’ve seen mistakes on W-2s over the years and even more issues with 1099s.
James Jenkins, president of Southfield, Mich.-based Jenkins & Co., said the internal controls at small companies relating to 1099 miscellaneous forms — the ones you get if you earned money from a company but are not an employee — aren’t always as good as those for a W-2 form.
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Jenkins said the dollar amount that shows up on the 1099 could be wrong compared with what you actually received.
Or, if you’ve incorporated, the 1099 might incorrectly be made out to you as an individual.
Most people should have received a 2009 W-2 from each employer by Feb.[space]1.
The Internal Revenue Service also notes an employer can send a W-2 electronically with your consent.
So if you don’t have all of your W-2s by now, contact your employer.
If you still don’t have them by Feb. 15, call the IRS at 800-829-1040.
Once you get your forms, take a good look at them.
You’re going to need to match year-end pay stubs with the reported earnings on the statement; also make sure that your name and mailing address are correct.
Check to see whether the Social Security number is correct.
Did you get married or divorced? Did you officially change your name? If so, make certain that information is accurate on your W-2.
Greatland has a Do’s and Don’ts Fact Sheet at its Web site, www.greatland.com, to help businesses avoid making mistakes with W-2 forms.
These include: Do make sure all copies are readable. Do include decimal points in the monetary entries. Don’t complete forms by hand.
Don’t inappropriately check “Retirement plan” Box 13. Don’t use dollar signs or commas in the monetary entries in Copy A.
You’ve probably been getting tax forms for years without ever thinking that there might be a business in preparing them.
“They (taxpayers) only think about it this time of year,” said Janice Krueger, a subject matter expert for Greatland, which also has offices in Green Bay, Wis.
If a small business has sent out 1099s or W-2s but later realizes that mistakes were made, Krueger said the best thing to do is contact the IRS or the Social Security Administration for guidance.
The IRS said if individual taxpayers spot something wrong on a W-2 form, they should first try to get a corrected copy from their employer by Feb. 15.
Failing that, contact the IRS.
After doing so, you would be sent Form 4852 to use as a substitute wage and tax statement, which you’d have to complete with the best information you have.
An IRS representative can initiate a Form W-2 complaint and advise the employer of the penalties for failing to provide a correct W-2.
Something to remember in light of the recession: Even if a company went out of business in 2009, it still must send out W-2 forms.