How to correct a W-2 if overtime pay was reported incorrectly (W-2c process)?
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Executive summary
Correcting an overtime-pay error on a previously filed W-2 requires filing Form W-2c to show both the previously reported amounts and the corrected amounts, filing a transmittal W-3c, delivering corrected copies to the employee, and coordinating any payroll tax adjustments with Form 941‑X; employers should act promptly to limit penalties and to resolve employer/employee tax liability differences [1] [2] [3]. Electronic filing via the SSA’s Business Services Online (BSO) or approved third‑party vendors is now standard for most filers and makes validation and batch submissions easier [4] [5].
1. Identify the mistake and quantify the effect
Begin by determining which boxes were wrong (federal wages, Social Security wages, Medicare wages, withholdings, etc.) and calculate the correct overtime amount and how it alters each affected box; Form W‑2c requires showing the “previously reported” and “correct information” side‑by‑side, so have precise original and corrected figures for boxes such as 1, 3 and 5 if overtime changed taxable wages [6] [7].
2. Fill out Form W‑2c correctly — show old and new figures
Complete Form W‑2c by entering the tax year, employer details and then filling only the money fields that are being corrected, putting previously reported amounts in the left column and corrected amounts in the right column; follow the official Form W‑2c and instructions closely to avoid rejections or creating new errors [8] [9].
3. File Form W‑3c and submit to the SSA (e‑file when required)
Whenever a Form W‑2c is filed for a tax year, file a separate Form W‑3c as the transmittal for that W‑2c filing; send Copy A of the corrected return to the Social Security Administration (via BSO or paper where permitted), and use the SSA’s W‑2c/W‑3c online application or approved e‑file providers for batch submissions and real‑time validation [2] [4] [5].
4. Coordinate payroll tax corrections with Form 941‑X and settle liabilities
If correcting overtime changes Social Security, Medicare, or withheld income tax, prepare Form 941‑X for each affected quarter to adjust employer and employee tax liabilities and ensure the employer’s EIN and amounts reconcile across W‑2c, W‑3c and 941‑X; employers remain liable for any unpaid employer FICA and must remit those amounts, and in some cases reimburse or collect adjustments from the employee consistent with payroll policy and legal limits [3] [7].
5. Furnish corrected copies to employees and attend to state/local rules
Provide employees corrected W‑2c copies promptly (label employee copies “CORRECTED”), but do not write “CORRECTED” on Copy A filed with the SSA; if only state or local data change, follow state procedures—some agencies require separate handling, additional overpayment forms, or payment with the correction (for example, Colorado’s process) [5] [10] [11].
6. Timing, penalties, and practical safeguards
File W‑2c/W‑3c as soon as the error is discovered to reduce penalties for incorrect information returns, and use the SSA validation tools or approved e‑file vendors to catch formatting and numeric issues before submission; maintain documentation of why the correction was made, and consider consulting payroll or tax counsel for complex situations such as retroactive pay adjustments, which some guidance flags as not to be reported via W‑2c in certain contexts [2] [10] [5].
7. When corrected wages affect an employee’s return
If the W‑2c changes the employee’s tax liability, the employee may need to amend their personal tax return (e.g., file Form 1040‑X) to reflect the corrected wages and withholdings; employers should communicate clearly so employees can take appropriate action [3].