W2 with wrong SSN in prior year

[rtsietsema]

New client for 2021. Completed return and in reviewing the 2020 taxpayer filed return, found a significant error worth correcting. Taxpayer brought documents that were used to create the 2020 return. In it was a W2 for her husband from an employer with the wrong last digit on the SSN. She paper filed, suspect W2 had something to do with TurboTax not allowing e-file. To our knowledge, the paper return is not processed. I’ve requested the client get transcript access. The employer has done this wrong number “for years” according to the client, but never issued a correction, even being told of the issue. Spouse did not have this job in 2021. So a non issue there.

Question. I need to paper file the amended 2020. Do I need to deal with the error in submitting the amended return? And if I should, how? If the IRS has processed the return as submitted, the amended should go without issue.

Also, the errors being corrected in the 2020 create a Capital NOL carry forward, which was not known when I did the 2021. If I amend 2021, it can be e-filed. Would that be an issue if it is filed before the amended 2020 paper filing gets processed?

I’ve also advised the client there are issues to resolve the SSA.

Thanks

[Anarchrist]

if it is filed before the amended 2020 paper filing gets processed?

Probably
.

[Rapid Robert]

"a W2 for her husband from an employer with the wrong last digit on the SSN."

When efiling, it is possible to indicate that the name, address, and/or SSN on the W-2 is different from what is on the front page of the tax return. I don't think it should have prevented efiling, but maybe that's a shortcoming of TurboTax.

"the errors being corrected in the 2020 create a Capital NOL carry forward,"

Do you mean NOL carry-forward, or capital loss carry-forward? (although maybe it doesn't matter for your question).

"If I amend 2021, it can be e-filed. Would that be an issue if it is filed before the amended 2020 paper filing gets processed?"

I don't think so. I have never seen any evidence that IRS computers automatically try to compare carry-forward amounts from prior years (maybe for some credits? But I've not seen that either). But what would the "issue" be? I can't imagine the IRS would reject it. If you are filing a correct 2021 return, that is all that matters for 2021, not whether or how many prior year returns you filed. The act of filing a return stands alone for each tax year, you are not required to file returns in chronological order.

[rtsietsema]

Thanks for the input. I have the transcripts, and the return has been accepted as filed by the taxpayer. The W2 income was accepted as part of the total income, and it probably helped, there was no withholding.

It is a capital loss being carried forward. I know the IRS has each year stand on its own, which means the order they process shouldn’t matter.

I now have the client checking on Social Security.

[EvenKeelTax]

I've always been able to e-file a tax return with a wrong SSN on a w2. I always advise client to go to employer and have it corrected ASAP, I include that in my file notes, and then it's up to the client to go get it fixed. Of course now with a lot of w2s only showing the last 4 of a SSN you might never know if the first 5 are wrong...

[FEDUKE404]

I've always been able to e-file a tax return with a wrong SSN on a w2. I always advise client to go to employer and have it corrected ASAP, I include that in my file notes, and then it's up to the client to go get it fixed. Of course now with a lot of w2s only showing the last 4 of a SSN you might never know if the first 5 are wrong...

I'm game.

How do you efile a tax return with a correct client SSN but at the same time enter an incorrect SSN when you fill in the software data fields for the W2?

An error of that type would have my software blocking me from even getting near the final efile transmission step until the problem was resolved.

Also, has your client (the one with the correct SSN on the tax return) bothered to check his recent Soc Sec earnings record? He MIGHT be in for a BIG surprise!!

[Lion]

You can e-file a return using the correct tax ID for the tax payer, but using the SSN that appears on a W-2 or other tax document. Think of someone with an ITIN but has a W-2 with a SSN that's not his so he could work. The IRS doesn't care what number is on a random W-2, as long as it collects tax resulting from that W-2.

[EvenKeelTax]

I'm game.

How do you efile a tax return with a correct client SSN but at the same time enter an incorrect SSN when you fill in the software data fields for the W2?

An error of that type would have my software blocking me from even getting near the final efile transmission step until the problem was resolved.

Also, has your client (the one with the correct SSN on the tax return) bothered to check his recent Soc Sec earnings record? He MIGHT be in for a BIG surprise!!

I never enter a client SSN for each w2, and I never have done that including my time working at Liberty Tax and Jackson Hewitt many years ago. With Drake all I enter is the EIN and info for the employer. For MFJ the "T" or "S" check box takes care of the rest. These days on a lot of w2s you can only see the last 4 anyway.

I always advise clients to get it fixed for the purposes of social security and medicare, but I don't force them to go change it before I finish their return.

If what I am doing is wrong I'd like to know so I can change my approach...

[Rapid Robert]

"If what I am doing is wrong I'd like to know so I can change my approach..."

What you are doing is correct probably 99.999% of the time. As I posted earlier in reply #3, there is a way to handle a W-2 with incorrect name, address, and/or SSN when efiling. If your W-2s are not incorrect (for example, if taxpayer has not moved to a new address since the W-2 was issued), then you are fine. If your software does not provide a way to do this, then your software is deficient (like possibly TurboTax).

When efiling, it is possible to indicate that the name, address, and/or SSN on the W-2 is different from what is on the front page of the tax return. I don't think it should have prevented efiling, but maybe that's a shortcoming of TurboTax.

[FEDUKE404]

I never enter a client SSN for each w2, and I never have done that including my time working at Liberty Tax and Jackson Hewitt many years ago. With Drake all I enter is the EIN and info for the employer. For MFJ the "T" or "S" check box takes care of the rest. These days on a lot of w2s you can only see the last 4 anyway.

I always advise clients to get it fixed for the purposes of social security and medicare, but I don't force them to go change it before I finish their return.

If what I am doing is wrong I'd like to know so I can change my approach...

Let me guess: During your experience with Liberty and Jackson-Hewitt if you were presented with a W2 that had a different mailing address than appeared on the actual Form 1040, you did NOT change the address of the W2(s) to match the actual document?
Last I checked it is a requirement per the IRS to accurately report the information as shown on the tax document.
Autofills on software can have merits, but they don't include altering the information as shown on the actual tax document.
(A somewhat related issue is related to the automatic calculation of the FICA tax on the W2. The amount shown on the W2, especially during the COVID era, might not match the "automatic" amount if you simply let your software fill in that blank.)
And it is not unheard of to have an "incorrect" (or expired) EIN shown on the W2. I guess you just "correct" that yourself and move onward also??

[Lion]

I started out at H&R Block decades ago. We were taught to enter documents exactly as the original. Most of the time, auto-fill did that for us. But when a document did not match the auto-filled Name, SSN, address, anything at all -- we were to manually enter that different information from the document into the software. Now decades later on my own, I have my software set up to auto-fill, but I manually enter any differences.

[Anarchrist]

You can e-file a return using the correct tax ID for the tax payer, but using the SSN that appears on a W-2 or other tax document.

The software I use requires the SSN on the w2 input equal the SSN on the 1040

[EvenKeelTax]

And it is not unheard of to have an "incorrect" (or expired) EIN shown on the W2. I guess you just "correct" that yourself and move onward also??

When an EIN is incorrect the tax return can't be e-filed so I don't "correct" that myself. I always advise clients to have employer issue a corrected w2 when I see a wrong SSN.

This is a good thread, and I appreciate all the replies. I'm always willing to learn and change my approach. I do wonder if anyone has ever seen a client get a CP2000 or other IRS notice because name/address/SSN/other info on a w2 didn't match what was e-filed? I've never seen one.

[Lion]

It's not the IRS's job to tattle to ICE. The IRS doesn't care what a worker uses for a SSN, as long as the worker files a tax return with his ITIN/applies for an ITIN with his return.

[Anarchrist]

I do wonder if anyone has ever seen a client get a CP2000 or other IRS notice because name/address/SSN/other info on a w2 didn't match what was e-filed? I've never seen one.

I never change the address on the W2 input. It auto-fills with what's on the 1040 and I leave it. Never once has a client been contacted about it. Changing the taxpayer address on the W2 input is a complete waste of time.