W2 issued wrong

[superman]

I have a client that recieved a w2 issued to his late wife for sick and vacation time. She passed away in 2009 but this income was not issed until 2010. Now he recieves the w2 for the income with her social in the box.

Can I put her back on the return this yr so the w2 does not throw any red flags or should I just attach an explantion to the return? This should be the last of the income and the last yr that we have to deal with this.

I live in a community property state if this has any effect on the return.

Thanks
Superman

[FEDUKE404]

Simplest answer

The income technically still belongs to his deceased wife.....who cannot file a tax return....so theoretically the income belongs in her estate and not on her husband's current tax return.

While I know very little about community property states (thank goodness!) one would think the income might even slide through without any income tax issues.

FE

[Burke]

Instructions for completing W-2 for a deceased person: "....if you made the payment after the year of death, do not report it on Form W-2, and do not withhold social security and Medicare taxes. Whether the payment is made in the year of death or after the year of death, you also must report it in Box 3 of Form 1099-Misc, for the payment to the estate or beneficiary. Use the name and TIN of the payment recipient on Form 1099-Misc."

So you need to go back to the employer and get it adjusted and a refund of the FICA taxes. You cannot put it on the 2010 return since she died in 2009. Hopefully, they did not withhold federal and state taxes as well.

[FEDUKE404]

A possible Plan B

Depending on the underlying facts, you might have a shot at obtaining a corrected W2 for calendar year 2009 and then filing an amended return.

But as Burke noted, if the income was not available until after death, it is likely an estate/Form 1099 issue.

BTW: Were there funds distributed and, if so, who received them and when??

FE

[superman]

Death

I would try and get the form reissued but she worked for the state and getting anything done with them is next to impossible. there were no taxes withheld so we are good there.

The surviving spouse recieved the income but has been battleing the state for 12 months on other issues to get everything set. I am thinking it is the last thing he wants to do right now. The w2 is in the dead spouse social number and from what you guys say should of been in the surviving spouse social. What to do?

Will sleep on it and talk with client in the morning.

Thanks for your help been her since 3am.

Superman

[FEDUKE404]

Clarifying

I would try and get the form reissued but she worked for the state and getting anything done with them is next to impossible. there were no taxes withheld so we are good there.

The surviving spouse recieved the income but has been battleing the state for 12 months on other issues to get everything set. I am thinking it is the last thing he wants to do right now. The w2 is in the dead spouse social number and from what you guys say should of been in the surviving spouse social. What to do?

Will sleep on it and talk with client in the morning.

Thanks for your help been her since 3am.

Superman

I think Burke has pretty well already answered your question.

By "no taxes withheld" are you referring to both federal/state withholding as well as to FICA/Medicare??

As for your comment noted above, it would be a stretch to consider such income as belonging to the husband. Yes, likely going to spouse as survivor, but not "his" income.

FE

[superman]

No taxes at all

were withheld. It just has one amount in box 1 the rest is blank.

Superman