If my employer misreports overtime withholding on the W-2, how do I correct it with payroll and the IRS?
Executive summary
When overtime withholding is misreported on a Form W-2, the employer is responsible for fixing the return and reissuing a corrected Form W-2c to the employee and the SSA, and may need to adjust prior-quarter payroll tax filings with Form 941-X; if the employer will not or cannot make the correction, the IRS can intervene and provide Form 4852 so the employee can file on time and later amend if necessary [1] [2] [3].
1. Ask payroll first — the mandatory first move
The Internal Revenue Service directs employees to ask their employer or payroll/HR department to correct any W-2 errors; employers are required to provide accurate W-2s and to furnish corrected forms to employees as soon as possible [4] [1], and payroll departments are expected to file a corrected Form W-2c and transmittal W-3c with the SSA when they discover the mistake [5].
2. What the employer must file: W-2c and W-3c, promptly and precisely
When an employer finds an incorrect wage or withholding amount, the right instrument is Form W-2c (Corrected Wage and Tax Statement), filed with the SSA and issued to the employee; the SSA and IRS guidance instruct employers to file Forms W-2c and W-3c “as soon as possible” and to provide the employee with a corrected copy [1] [5] [6].
3. Payroll-tax fixes: use Form 941-X for quarterly adjustments
Reporting and deposit errors on a W-2 frequently reflect mismatches with amounts reported on Form 941; employers should use Form 941‑X (Adjusted Employer’s QUARTERLY Federal Tax Return) to correct previously filed quarterly returns and either claim a refund or apply an adjustment to the correct quarter, following IRS correcting-employment-taxes guidance [2].
4. Refunds, liabilities, and what employers must refund to employees
If there was an overwithholding of Social Security or Medicare, the employer must refund the excess to the employee and reflect the corrected amounts on Form W-2c; the IRS expects employers to correct overwithheld FICA and handle associated reporting and repayment promptly [7] [8].
5. When the employer won’t — IRS intervention and Form 4852
If an employer fails to issue a corrected W-2 by the end of February after the employee’s request, the IRS will contact the employer and can send the employee Form 4852 (Substitute for Form W-2) with instructions so the taxpayer can file their return using estimated correct figures; the IRS will also ask the employer to furnish a corrected Form W-2 within ten days [3] [9].
6. Filing now and fixing later — use 4852 and amend if needed
Taxpayers who use Form 4852 to file on time because of an uncorrected W-2 must later reconcile differences if a corrected W-2 arrives: the IRS requires filing Form 1040-X to amend the return when the information reported on the later W-2c differs from what was filed using Form 4852 [3].
7. Practical timing, penalties and small errors
The IRS and payroll-practice guides urge issuing a W-2c as soon as a mistake is found; employers can reduce or avoid penalties by correcting promptly and may request penalty abatement with documentation if penalties are assessed [10] [5], and there is a de minimis safe-harbor for very small dollar errors that may not require correction though employers are encouraged to correct even minor mistakes [7].
8. Documentation and limits of public guidance
Employees should preserve pay stubs, correspondence with payroll, and any employer responses to substantiate claims or corrections, and should note that for certain withholding categories—especially federal income tax and Additional Medicare Tax—correction options differ and may be limited to “administrative” scenarios or year‑of‑discovery rules, so specific cases should be verified against IRS publications or a tax advisor [7] [8] [11].