Wrong state tax withheld by employer

[Brandon123]

Hi everyone,

My ex employer withheld tax for the wrong state. I live and work in a state with no income tax. This happened in 2022, but I found out about it recently (2023). I contacted the ex- employer (federal government). Initially they said that they would send me a corrected W2. But later, they emailed me back saying that they couldn't help me.

What should I do?
Thanks in advance.

 

[Philliefan33]

Can you file a tax return for the state that was withheld, claiming zero tax due to get a full refund?

Another W2 isn’t what you need. If the state income tax was withheld or needs to be reflected on the W2.

 

[MichaelB]

Hi everyone,

My ex employer withheld tax for the wrong state. I live and work in a state with no income tax. This happened in 2022, but I found out about it recently (2023). I contacted the ex- employer (federal government). Initially they said that they would send me a corrected W2. But later, they emailed me back saying that they couldn't help me.

What should I do?
Thanks in advance.

Did you live in a state that taxes income before 2022? Is the state tax being withheld from a state where you lived or had residency at one time?

 

[athena53]

Can you file a tax return for the state that was withheld, claiming zero tax due to get a full refund?

Another W2 isn’t what you need. If the state income tax was withheld or needs to be reflected on the W2.

I agree although I'm not a tax guru. If your W-2 correctly says that $X was withheld for taxes in State Y, there's nothing to correct on the W-2 and you'll need that form for backup when you file with State Y and claim zero liability.

If you had any relationship with State Y, check the laws. I'll give you an example that still ticks me off. In mid-2002 I was living in NJ and started a WFH job with a company in KS. I moved to KS in mid-2003. Of course my income from that job in 2002 and in the first half of 2003 was taxable in NJ. What I did NOT expect was that 50% of a bonus I received in 2004 was taxable by NJ. I checked into it and found that since the bonus was based on my performance during 2003, NJ taxed half of it.

Really sleazy but the payroll people were just complying with the law. Of course, that half wasn't taxed by KS but it took extra forms to sort that out.

ETA: you might want to add a polite explanatory note to your State Y return.

 

[Brandon123]

Thanks for replies. This was a temporary job. My ex employer's regional office was located in this state (where they withheld taxes). I didn't work in this office/state either in person or remotely. I don't have any relation to this state (never been a resident).

I am planning on filling non-resident taxes with this state, to claim all the money back. If I file my taxes electronically, how do I attach an explanatory note? Do you suggest, I file federal taxes electronically, then file non-resident taxes for this state on paper?

 

[Montecfo]

don't know the states but there may be a claim form to file instead of tax return. But zeros tax return also pretty easy.

Mail it in with statement. Be very specific: taxes withheld in error, never lived nor worked in state. No connection to state. Employer unable to correct their error.