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Wrong state on W-2/state returns

Hello There,
I'm seeking some guidance on a situation involving the incorrect state reported on a W-2 and on state returns. In 2016 an employee was in a branch location in IL instead of where he actually worked, OH. Everything for 2016 for him was filed under IL. He called to let us know he just caught that and now he owes the state of OH and is expecting a refund from IL. Considering the employee did not realize the issue until 2 years later and also that the payroll team now is entirely new so we can't speak to why he was put in IL, do we still need to issue a W-2C for 2016 and also amend our returns for those two states for the 2 quarters he was employed here in 2016?

Comments

  • You can prepare a W2c: 1. For Illinois reporting $0 wages and leave the taxes. 2 For Ohio report the appropriate $ for wages with no withholding. Ideally the employee may receive a refund from IL. He will have to pay OH. You will also need amended returns for the States. Depending on your filing requirement you may be able to just amend your annual return.

  • Just for curiosity sake, in which state was the work done? I am not expert in the rules of the two states, but an employee saying "your problem, fix it" does not make it true. I would want to be very sure what the employer should have done prior to making any corrections. If the employee lives in IL and no work was done there and no nexus exists in IL, then absent a reciprocal agreement, I can see some good reasons to NOT make the changes. And if you do not know where the work was done, then this request is the least of your problems.

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