Differences in federal taxes for W2c. Which do I report

Forum|Forum|1 year ago
April 10, 2025
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Hey everyone, I’ve got a bit of a tax question I’m hoping someone here can help with.

In 2024, my wife was accidentally overpaid by her employer. The error wasn’t discovered until 2025, so they issued a corrected W-2 (a W-2C) to reflect her actual income. Because she had already paid federal income tax, Social Security, and Medicare on the original (higher) amount, the correction impacted the taxes reported.

From what I understand, the IRS does refund both the employer and employee portions of Medicare and Social Security taxes back to the payroll company. However, my concern is around how this gets handled on our end with the 1040.

If I use the corrected W-2C numbers when filing, it won’t reflect the higher amount of federal and state income tax that was actually withheld and sent to the IRS and state in 2024. So I’m worried the IRS won’t know there was an overpayment to begin with—and therefore won’t issue any refund for it.

The Question: Should she use the original W-2 numbers for reporting federal and state income tax paid, but use the W-2C (corrected) numbers for everything else, like wages, Social Security, and Medicare?

That seems a little strange. Will it ensure the IRS sees the full picture and can refund the overpaid taxes?

Appreciate any insight—thanks so much!

ThomasM125

You should use the corrected W-2 numbers on your tax return. The excess taxes will be returned to your employer when the corrected payroll forms are submitted by your employer. So, the IRS will find out about the excess when your employer submits the corrected W-2 form and associated payroll tax returns. Then, your employer will have to reimburse you for the excess taxes you paid in.

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