VA needs a copy of W2 to verify withholding

VA department of taxation is asking a copy of W2 to verify withholding. Cannot VA find the amount deposited on their bank account?

CA asks for W-2 as well. I think they all should have the information.

I know, right? They should have a record of the withholding form the annual payroll returns.

I think I remember you have trouble getting these things in the mail from your location, correct?

You really need to solve that issue somehow. I doubt these states will allow credit for the withholding if you don't send in these items as requested.

Can you fax them perhaps? Maybe call the states and see if you can fax.

What do you mean "California asks for the W-2 as well"?

What do you mean "California asks for the W-2 as well"?

I meant: In some situations California asks for the W-2 to verify withholding before it can release the refund.

In my situation, the taxpayer has two W-2's: one is from his regular job, and the other one is from Metlife for his short term disability. They could not verify the withholding amount from Metlife and asked me to send in the W-2, paycheck stub, etc to substantiate the withholding.

I find it odd because the money should be deposited in their bank. It should be what they received not what I said I paid.

The states (VA, CA that I have experienced) do not know what have been paid to them?

The states (VA, CA that I have experienced) do not know what have been paid to them?

I think you’re missing a key element here: If income tax is withheld, the EE will get credit for it, whether or not it’s remitted by the employer. That’s how it works at the fed level anyway, unless there is an eggregious case of some small corp who issues a W2 to the sole owner and the withheld taxes never get remitted. When that individual goes to file his 1040, the IRS might not grant credit for the withheld taxes. Check the case law on it. Other than that situation, an EE gets credit for what was withheld, whether or not its remitted by the ER.

What the state is worried about here is a bogus W2 that shows state withholding. If credit is granted to the EE, there is no employer to go after. If you provide a W2, the state will likely cross-check to see that the employer has filed quarterly (or monthly or whatever) state withholding reports, perhaps an Annual Withholding Rec, state copies of the W2’s, etc. And then the state will be able to see if the ER actually remitted those withheld taxes, not that that totally matters from the EE’s standpoint.

I think you’re missing a key element here: If income tax is withheld, the EE will get credit for it, whether or not it’s remitted by the employer.

Jeff-Ohio: Thanks for the info. Here is my question still:

It is not that the VA or CA do not have the info on the W-2, they have an electronic copy of the W-2 that I submitted to them, they know who is the ER and who is the EE, their tax ID's, the withholding amount. They should be able to verify the information instead of asking me for a paper copy. In my case, the withholding has been paid, the payer is MetLife, a large company with a long history.

If they cannot verify, what happens if someone claims 2000 withholding while the actual withholding is 1000?

they have an electronic copy of the W-2 that I submitted to them

That’s new information. Not sure if you attached it as a pdf to the return, subsequently sent it in electronically, or if your just talking about your inputs into the e-file record. Regardless, they are having a problem with a match-up, or so they say. So you really have no choice but to comply by mailing in a copy. How hard does CA investigate these things before sending a letter to the taxpayer? Knowing CA, probably not that hard.

We had one of these in VA a while ago. We sent in a copy of the W2. They said that wasn’t good enough. They needed an original.

Whatever.

These states have nothing to lose by sending these letters and making life difficult for taxpayers. We had a CA one one time and we sent in what they wanted. They still didn’t do anything. And then they levied the guy’s bank account. It ultimately got sorted out.

If they cannot verify, what happens if someone claims 2000 withholding while the actual withholding is 1000?

Your question is kind of ambiguous…but if they ask for a W2 and end up not being able to verify anything, they’ll assume the W2 is phony and will probably give you nothing. If they accept the W2 you submit as evidence and it shows $1k of withholding, and the client claimed $2k, they’ll give $1k credit to the client.

In my case, the withholding has been paid, the payer is MetLife, a large company with a long history.

Doesn’t mean anything. Isn’t it possible that some fraudster could doctor up a W2 from Met Life? You know, show a little bit of income and a lot of withholding…

That’s new information. Not sure if you attached it as a pdf to the return, subsequently sent it in electronically, or if your just talking about your inputs into the e-file record.

The electronic copy of the w-2, I was referring the information I provided on the return. It appears in Schedule W-2 of the CA return. I was told that when there is an w-2 schedule, I do not need to attach a copy of w-2 when filing by mail. This makes sense as with the info, they should be able to verify the information. Apparently they cannot, or cannot in all situations, or they can but more difficult than asking for w-2. If they cannot, how would it be discovered if someone claims incorrect amount of w-2, intentionally or accidentally?

'I was told when there is a W-2 Schedule , I do not need to attach a copy of the W-2 when filing by mail "

This is new information your providing regarding filing a paper return . I don't know who told you this but in California and presumably in Virginia you need to attach the state W-2 to the paper tax return regardless of a W-2 summary

This is your problem and the cause of why your having inquiries from Virginia and California . When paper returns are submitted all the information has to be key entered from scratch.

This is new information your providing regarding filing a paper return . I don't know who told you this but in California and presumably in Virginia you need to attach the state W-2 to the paper tax return regardless of a W-2 summary

This is your problem and the cause of why your having inquiries from Virginia and California . When paper returns are submitted all the information has to be key entered from scratch.

The VA and CA returns for which I asked for paper W-2's were filed electronically. Whether a copy w-2 needed when filing paper return is related question, which is: do they need the information on the paper or the piece of paper itself to verify the withholding?

I think they should use the information on the paper, not the paper itself, because they do not have the piece of paper when we E-file.

By the way, I do not think they manually key in the information on paper filing. Most likely they will scan the paper tax return.

but in California and presumably in Virginia you need to attach the state W-2 to the paper tax return regardless of a W-2 summary

Indeed. That is basic. Anytime you paper file a return, you need to attach the W2’s (and anything else that shows withholding).

Not for VA. VA has you enter all the info and produces a barcoded page for the W-2.

Not for VA. VA has you enter all the info and produces a barcoded page for the W-2.

And,VA has a "unique" Employer ID Number - how they index the data base for Employers and associate a "unique"
"account number", to each.

I think OP said that he efiled.

Odd that both states asked for it. Is it possible that the w2 is not accurate or if the company who produced it did not file it properly? (Unlikely I suppose if from met life)

Also, is this the return that you posted about earlier for which you used a fictitious social security number for the spouse to get the efile to go through?

Are the refunds larger than normal or going to a non us address? Does the withholding exceed 20%? How big are they?

I wonder if any of these things are causing your issue?

Just send them the W-2s.

Not for VA. VA has you enter all the info and produces a barcoded page for the W-2.

On any paper-filed return, you run the risk that OP is facing if you do not attach a physical copy of the W2. If you paper-file a VA return, it even says right there in the instructions, at the top of Page 7, to attach W-2’s:

https://www.tax.virginia.gov/sites/defa ... ctions.pdf

Speaking of VA, we had the same issue that OP had a few years ago. We attached a copy of the W2 to the 760. Then they said that wasn’t good enough (despite what the form instructions say). They wanted an original.

I think OP said that he efiled.

Don’t think so. OP keeps providing new information. OP first said this in Post #6:

It is not that the VA or CA do not have the info on the W-2, they have an electronic copy of the W-2 that I submitted to them

But then, in Post #8, OP said this:

The electronic copy of the w-2, I was referring the information I provided on the return. It appears in Schedule W-2 of the CA return. I was told that when there is an w-2 schedule, I do not need to attach a copy of w-2 when filing by mail.

…hence Lucy’s comment in Post #9. Lucy took the above comment to mean that the client paper-filed. I took it that way too. If we’re right, then an “electronic copy of the W-2” was never submitted. All OP did is fill out some form listing the W2 details and included that form with the paper-filed return.

So, in summary, my take (although I could be wrong) is that the client paper-filed without attaching the W2’s. And now we have these problems. One thing you learn very early on in your career is to attach any document that shows withholding to a paper-filed return. And if there’s enough room, you staple this stuff to the face of the return on the left-hand margin.

At the end of the day, given where we are now, Post #15 is a nice concise summary (whether the return was e-filed or paper-filed).

Just send them the W-2s.

Even though the OP's location says VA, given his screen name and his previous posts, I think he is in Costa Rica. In many places there, traditional mail is not available or reliable (though they have great schools, national parks, and health care - I go surfing there every year).

Don’t think so. OP keeps providing new information. OP first said this in Post #6:

I am sorry for the confusion, let me get the facts straight.

1. I had E-filed CA return in question. There was nothing special on the return: all people on the return had SSN's, the refund was about 4000. The letter from CA said:

We changed your 2018 tax return which resulted in a refund of $1,7xx.xx.

Explanation of change(s)

A. CA Income Tax Withholding:

The withholding claimed on your return has been revised to the amount that we could verify with the Employment Development Department (EDD). We also considered any W-2's and forms 1099 reporting withholding that you provided with your tax return. If you have documentation supporting the original amount of withholding claimed, please contact us (CODE: GC)

B. CA Income Tax Withholding:

We could not verify your withholding. (Code: VL)

This client has two W-2's, one is from his "regular" employer, and the other from Met Life for his short term disability. CA not only needs the W-2's but other supporting documents to substantiate the withholding. By luck my client was able to find two final paycheck stubs from Met Life for each of the two short term disability claims he had. I sent the two final paycheck stubs as well as the W-2 from Met Life to CA.

Each claim has its own "year to date" withholding amount, and they add up to the amount in W-2. They questioned the two year to date amounts were not in sequence, I explained that this is how these claims work, they start from 0 for each claim, the year to date amount is specific to each claim.

Through the letter and phone communications, they finally released the additional refund. I did not send in the original W-2, nor they asked about it. They mentioned they had an "electronic version of the W-2" which is what I input and sent in as part of the electronic return. They were interested in additional documents that can be cross checked with the W-2, and fortunately we had that.

2. The VA return that prompted me to post this message was indeed filed by mail. I did not attach a copy of W-2 because a VA has a "2019 Schedule INC/CG" which contains:

Your/Spouse SSN
Withholding Type
VA Withholding
Employer FEIN
VA Account Number
VA Wages, tips, other comp.

The VA message is short: "W2 from xxx to verify withholding paid to Virginia". I faxed the W-2 and am waiting. I do not expect a problem, the total income is 20,xxx and the refund is 2xx.

This return was filed on paper due that it was an MFS return but the spouse does not have SSN. There is no reason to apply for ITIN as it is not needed as far as federal return is concerned. The federal E-file system has "spouse is an NRA" check box (so does CA), but VA cannot E-filed in this situation.

The return was not processed after 4 months since filing, so I called. They said they could not process it either (I did write NRA where the spouse's SSN is expected), and the only way to process it was to change to MFS to single. and they advised me to do it next time myself. I told them that I was not comfortable with deviating from the fact, they said that that is what they would do [change MFS to Single] anyway. I suggested to implement the "spouse is an NRA" box, they asked me to write to the customer service, which I will do. A few weeks after the call, I got the letter asking for W-2 as I mentioned above.

I had E-filed VA returns for which they asked W-2, I also had paper filed VA returns for which I did not attach W-2's and they did not ask for W-2.

In 33 years dealing with the California Franchise Tax Board, they have NEVER asked for a W-2 to verify the information they already have. I have never been aware of any other practitioner with that concern either. That problem does not exist.

You are misreading the letter from the FTB. California has NO PROOF of the withholding. They do not have information from the employer that shows the withholding you are claming. The problem is not with the FTB.