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Do NYC employers have a legal responsibility to correct in an incorrect w2. For 2012 in a timely fashion.

Westtown, NY |

Also my accountant told me I would have to pay a sum of $10,000 in taxes (federal and state) for taking out a NYC pension loan for $25,000. Is that reasonable.

Attorney Answers 4


  1. Generally yes. An incorrect W2 must be fixed.

    Ryan Finn * 518.213.0115 * Rfinn@hackermurphy.com * Referrals are the highest form of compliment * Hacker Murphy serves clients throughout New York State and always pays referring attorneys a reasonable referral fee in contingency cases


  2. Yes, an employer must correct a W2 if it is wrong. If the pension loan was taxable income, yes you should withhold taxes for it.

    This is not legal advice nor intended to create an attorney-client relationship. The information provided here is informational in nature only. This attorney may not be licensed in the jurisdiction which you have a question about so the answer could be only general in nature. Visit Steve Zelinger's website: http://www.stevenzelinger.com/


  3. I cannot speak as to your tax question, but all employers have a legal duty to correct incorrect W-2 forms. Contact the IRS and New York State Department of Taxation immediately if your employer refuses to do so.

    This answer does not constitute legal advice and you should contact an attorney to confirm or research further any statements made in this answer. Any statements of fact or law I have made in this answer pertain solely to New York State and should not be relied upon in any way in any other jurisdiction. Additionally, we also encourage you to reach out to us via Twitter (https://twitter.com/#!/WhiteRoseMarks) or Facebook (http://www.facebook.com/WhiteRoseMarks) if you have follow up questions as we do not monitor questions after providing an initial answer.


  4. I am assuming that you are saying that you have taxable income for 2012 in the amount of $25,000 due to the fact that you defaulted on a loan from your pension plan with a $25,000 balance outstanding. Pension loans that are repaid in a timely manner do not generate taxable income, however, hardship distributions, which are not repayable to the plan, do generate federal and state income tax and generally also a 10% federal early distribution penalty tax. If defaulting on a loan from a tax-qualified pension plan and having to recognize $25,000 in additional income for 2012 is the issue and this is what is generating the extra $10,000 in tax liability (federal income tax, state income tax, plus applicable penalty tax), then you need to make payment to the IRS and the relevant state tax authorities in a timely manner or else face additional penalties and interest charges.

    Note, however, that your Form W-2 supplied by your employer may NOT be incorrect simply because it does not rec=flect the $25,000 defaulted loan amount as additional taxable income on Box 1 (wages) or on any other box of Form W-2. employers and their pension plans report plan distributions, including defaulted loan amounts, which are deemed "constructive distributions" on Form 1099-R, not on Form W-2. You may wish to ask your employer's payroll department or accountant if they pan to send you a Form 1099-R reflecting the additional income from the defaulted pensin loan if this is indeed what occurred--I'm kind of surmizing from your question that this is the case.

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