Quick summary
A Wage Reporting Discrepancy Notice signals a mismatch between what you reported on your tax return and what the IRS received from employers or payers. Common causes include an incorrect W‑2 or 1099, duplicate reporting, or simple clerical errors. Respond promptly, document the issue, contact the payer when necessary, and follow the IRS notice instructions. In many cases the employer corrects the form (W‑2c) or you file an amended return (Form 1040‑X) if you need to change your return.
Why this matters now
Ignoring the notice can lead to additional tax, interest, and penalties, and in rare cases may escalate to an examination. Responding quickly improves the chance the IRS will accept your documentation and correct the account without penalty. In my practice as a CPA and CFP®, clients who organized records quickly and supplied a concise packet resolved discrepancies faster and avoided most follow‑up correspondence.
Step‑by‑step action plan
- Read the notice carefully
- The notice will identify the tax year, the payer (employer or other reporting entity), the amount the IRS shows, and a response deadline. Always follow the instructions on the notice — it’s the controlling guidance.
- Gather documents
- Collect the tax return for the year in question and copies of all wage and income documents: W‑2s, 1099‑MISC/NEC, 1099‑K, pay stubs, final pay statements, and broker statements. Also gather any correspondence with employers or third parties.
- Reconcile differences
- Compare amounts reported on each slip to what you entered on your return. Common mismatches are box differences (wages vs. social security wages), duplicate 1099s, or a payer reporting pay under a slightly different taxpayer name or SSN.
- Contact the payer/employer
- If the error looks like it came from the employer or payer, contact payroll or the payer’s reporting department and request a corrected form (Form W‑2c or corrected 1099). Employers are responsible for issuing corrected forms to both you and the IRS. See IRS guidance on correcting W‑2s and filing Form W‑2c.
- Decide whether to amend your return
- If the payer issued a corrected form that changes your tax, you may need to file Form 1040‑X to amend your previously filed return. If the corrected form doesn’t change tax, you can send the corrected form and an explanation to the IRS as instructed on the notice.
- Respond to the IRS
- Mail or follow the online instructions on the notice. Include a cover letter that briefly explains your position (agreeing or disagreeing), list of enclosed documents, and copies — not originals — of W‑2s, corrected W‑2c, pay stubs, or a statement from payroll. Keep proof of mailing and copies of everything you send.
- Keep records and follow up
- Track any adjustments the IRS posts to your account. If you don’t hear back within 60–90 days, follow up using the notice contact information.
What to include in your response packet
- A copy of the IRS notice
- A short cover letter explaining the discrepancy and your requested outcome
- Copies of relevant wage forms (W‑2, W‑2c, 1099s) and pay stubs
- Employer statement or corrected wage reporting if available
- If you amended your return, include a copy of Form 1040‑X and the corrected schedules
Sample cover letter excerpt:
“Re: Notice for tax year 20XX; Notice number [from top right of notice]
Enclosed please find a copy of my W‑2 and a payroll statement showing correct wages. My employer has agreed to issue Form W‑2c. I do not agree with the IRS proposed change because [brief factual reason]. Please post the corrected W‑2 or advise if you need further documentation.”
When to file Form 1040‑X or expect a W‑2c
- Employer correction: Employers file Form W‑2c to correct wage statements. Ask that they send a copy to you and the SSA; the SSA forwards the update to the IRS. (See IRS info on W‑2c corrections.)
- Taxpayer correction: If you must change income, filing Form 1040‑X generally updates your return. Keep in mind refund claims are usually limited to three years from the original due date or two years from the date tax was paid, whichever is later.
Authoritative IRS resources
- “Responding to a Wage Reporting Discrepancy Notice” — IRS: https://www.irs.gov/individuals/responding-to-a-wage-reporting-discrepancy-notice
- About Form W‑2c and correcting wages — IRS: https://www.irs.gov/forms-pubs/about-form-w-2c
- About Form 1040‑X, Amended U.S. Individual Income Tax Return — IRS: https://www.irs.gov/forms-pubs/about-form-1040-x
Common scenarios and how to handle them
- Employer reported additional pay you didn’t receive: Request a corrected W‑2 (W‑2c). If the employer refuses or is unresponsive, document your communications and include pay stubs and an employer statement in your IRS response.
- Multiple employers or duplicate 1099s: Show reconciled year‑to‑date pay stubs and the IRS will usually accept a clear reconciliation. If duplicates exist because of platform reporting (e.g., gig work / 1099‑K), reconcile gross payments vs. taxable income and provide records of returns, invoices, and bank deposits.
- Name or SSN mismatch: Provide a corrected Social Security Number Verification or corrected W‑2. For SSN mismatches, contact your employer and the Social Security Administration if necessary.
Timeline and what to expect after you respond
- Processing times vary; simple corrections can take 30–90 days after the IRS receives your packet.
- If the IRS needs more information, they’ll send a follow‑up notice. Keep all tracking numbers for mailed packets and call the notice phone number if timelines exceed expectations.
When to get professional help
- Hire a tax professional if the discrepancy involves significant amounts, repeated notices, potential identity theft, or if you’re unsure which items to include. In my experience, a prepared tax pro shortens resolution time and reduces the chance the IRS will assess penalties.
Penalties, interest, and reasonable cause
- If the IRS adjusts your tax upward, you may owe tax, interest, and possibly penalties. If you can show reasonable cause (for example, you relied on erroneous employer reporting or had a documented administrative error), you can request penalty abatement. Cite IRS guidance when asking for abatement and provide supporting documentation.
Identity theft concerns
- If you suspect the mismatch is due to identity theft (e.g., wages reported under your SSN that you didn’t earn), contact the IRS Identity Protection Specialized Unit and follow IRS identity theft guidance. The IRS provides specific steps for identity theft victims; include a copy of Form 14039 if applicable.
Practical tips to reduce future problems
- Keep copies of all W‑2s and 1099s each year and reconcile pay stubs when you get your final year‑to‑date statement.
- Use secure, consistent information for employer records (legal name and SSN).
- If you change employers mid‑year, request year‑to‑date wage statements at termination.
Helpful internal resources
- For guidance on correcting wage forms and amending returns, see our guide: Correcting Wages or Withholding with Form 1040‑X and W‑2c (https://finhelp.io/glossary/correcting-wages-or-withholding-with-form-1040-x-and-w-2c/).
- If your notice is a Letter 12C (request for additional wage information), review our explainer on Letter 12C for a tailored checklist: Understanding Letter 12C: Request for Additional Wage Information (https://finhelp.io/glossary/understanding-letter-12c-request-for-additional-wage-information/).
Final checklist before you mail or upload documents
- [ ] Copy of IRS notice
- [ ] Cover letter (short, factual)
- [ ] Copies of W‑2/W‑2c/1099s and pay stubs
- [ ] Employer statement or corrected form if available
- [ ] Copy of amended return (Form 1040‑X) if filed
- [ ] Proof of mailing or electronic submission receipt
Professional disclaimer
This article is educational and does not replace personalized tax advice. Tax situations vary. Consult a qualified tax professional (CPA, EA, or tax attorney) about your specific case. The author has 15+ years of experience helping individuals resolve IRS notices.
Sources
- IRS, “Responding to a Wage Reporting Discrepancy Notice”: https://www.irs.gov/individuals/responding-to-a-wage-reporting-discrepancy-notice
- IRS, About Form W‑2c: https://www.irs.gov/forms-pubs/about-form-w-2c
- IRS, About Form 1040‑X: https://www.irs.gov/forms-pubs/about-form-1040-x
If you’d like, I can draft a one‑page response letter based on your specific notice language and documents — paste or summarize the notice and I’ll prepare a tailored draft.