Employer reported ESPP ordinary income on wrong year's W-2
Based on the statement in your question you think it should have been on the 2014 W-2 but it was included on the 2015 W-2. If you are correct, then you are asking them to correct two w-2 forms: the 2014 form and the 2015 form. You will also have to file form 1040-x for 2014 to correct last years tax forms. You will have to pay additional tax with that filing, and there could be penalties and interest. But if you directed them on the last day of the year, it is likely that the transaction actually took place the next year. You will have to look at the paperwork for the account to see what is the expected delay. You should also be able to see from the account history when it actually took place, and when the funds were credited to your account.  or you could just pay the tax this year. This might be the best if there is no real difference in the result. Now if you added the sale to your taxes lat year without a corresponding tax statement from your account, that is a much more complex situation. The IRS could eventually flag the discrepancy, so you may have to adjust last year filing anyway. You mentioned that the 1099B that reports this sale is for 2014, which means that you got the proceeds in 2014. What I suspect happened was that the employer reported this on the next available paycheck, thus reporting it in the 2015 period. If this ends up being a significant difference for you, I'd argue the employer needs to correct both W2s, since you've actually received the money in 2014. However, if the difference for you is not substantial I'd leave it as is and remember that the employer will not know of your ESPP sales until at least several days later when the report from the broker arrives. If you sell on 12/31, you make it very difficult for the employer to account correctly since the report from the broker arrives in the next year.
"QUICK ANSWER What @Mike Haskel wrote is generally correct that the indirect method for cash flow statement reporting, which most US companies use, can sometimes produce different results that don't clearly reconcile with balance sheet shifts.  With regards to accounts receivables, this is especially so when there is a major increase or decrease in the company's allowances for doubtful accounts. In this case, there is more to the company's balance sheet and cash flow statements differences per its accounts receivables than its allowances for doubtful accounts seems responsible for.  As explained below, the difference, $1.25bn, is likely owing more to currency shifts and how they are accounted for than to other factors. = = = = = = = = = = DIRTY DETAILS Microsoft Corp. generally sells to high-quality / high-credit buyers; mostly PC, server and other devices manufacturers and licensees.  It hence made doubtful accounts provisions of $16mn for its $86,833mn (0.018%) of 2014 sales and wrote off $51mn of its carrying balance during the year. Its accounting for ""Other comprehensive income"" captures the primary differences of many accounts; specifically in this case, the ""foreign currency translation"" figure that comprises many balance sheet accounts and net out against shareholders' equity (i.e. those assets and liabilities bypass the income statement).  The footnotes include this explanation: Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are recorded to other comprehensive income (“OCI”) What all this means is that those two balance sheet figures are computed by translating all the accounts with foreign currency balances (in this case, accounts receivables) into the reporting currency, US dollars (USD), at the date of the balance sheets, June 30 of the years 2013 and 2014. The change in accounts receivables cash flow figure is computed by first determining the average exchange rates for all the currencies it uses to conduct business and applying them respectively to the changes in each non-USD accounts receivables during the periods. For this reason, almost all multinational companies that report using indirect cash flow statements will have discrepancies between the changes in their reported working capital changes during a period and the dates of their balance sheet and it's usually because of currency shifts during the period." No, unvested money returns to the employer, its not yours. They should send you W2 which will only show the actual (vested) monies you got. After reading OP Mark's question and the various answers carefully and also looking over some old pay stubs of mine, I am beginning to wonder if he is mis-reading his pay stub or slip of paper attached to the reimbursement check for the item(s) he purchases.  Pay stubs (whether paper documents attached to checks or things received in one's company mailbox or available for downloading from a company web site while the money is deposited electronically into the employee's checking account) vary from company to company, but a reasonably well-designed stub would likely have categories such as Taxable gross income for the pay period: This is the amount from which payroll taxes (Federal and State income tax, Social Security and Medicare tax) are deducted as well as other post-tax deductions such as money going to purchase of US Savings Bonds, contributions to United Way via payroll  deduction, contribution to Roth 401k etc. Employer-paid group life  insurance premiums are taxable income too for any portion of the policy  that exceeds $50K. In some cases, these appear as a lump sum on the last pay stub for the year. Nontaxable gross income for the pay period: This would be sum total of the amounts contributed to nonRoth 401k plans, employee's share of group health-care insurance premiums for employee  and/or employee's family, money deposited into FSA accounts, etc. Net pay: This is the amount of the attached check or money sent via ACH to the employee's bank account. Year-to-date amounts: These just tell the employee what has been earned/paid/withheld to date in the various categories. Now, OP Mark said My company does not tax the reimbursement but they do add it to my running gross earnings total for the year. So, the question is whether the amount of the reimbursement is included in the Year-to-date amount of Taxable Income. If YTD Taxable Income does not include the reimbursement amount,  then the the OP's question and the answers and comments are moot; unless the company has really-messed-up (Pat. Pending) payroll software that does weird things, the amount  on the W2 form will be whatever is shown as YTD Taxable Income  on the last pay stub of the year, and, as @DJClayworth noted cogently, it is what will appear on the W2 form that really matters. In summary, it is good that OP Mark is taking the time to investigate the matter of the reimbursements appearing in Total Gross Income, but if the amounts are not appearing in the YTD Taxable Income, his Payroll Office may just reassure him that they have good software and that what the YTD Taxable Income says on the last pay stub is what will be appearing on his W2 form.  I am fairly confident that this is what will be the resolution of the matter because if the amount of the reimbursement was included in Taxable Income during that pay period and no tax was withheld, then the employer has a problem with  Social Security and Medicare tax underwithholding, and nonpayment of this tax plus the employer's share to the US Treasury in timely fashion. The IRS takes an extremely dim view of such shenanigans and most employers are unlikely to take the risk. These unclaimed wages were presumably yours for the taking in Year X when employer paid your other wages.  Maybe this is just about uncashed paychecks.  In that case, they would have appeared on your W-2 for that year.  If you filed your return including that W-2 income, then this is likely not new income. This would be a constructive receipt evaluation.  Income occurs when you have the right to income, whether or not you have actual receipt of it.  For example, if you are paid via cash drops into a piggy bank but you wait a week (for the start of a new tax period) to withdraw your cash from the piggy bank, then the money was constructively received on the day it went into the piggy bank.  This prevents taxpayers from structuring their actual receipt of income, for tax purposes or otherwise, in ways at odds with their true economic position.  You can't delay taxable income that is legally yours simply by refusing to accept it when you have the right to it. The wages were income at the time your employer proffered the paycheck.  You did not cash it, but I suspect that you filed it on that year's taxes.  There's a slight wrinkle that when the check went stale your ability to access the money was not so straightforward.  However, you still had the legal right to the money, so my perspective is that the analysis did not change when the check went stale. What happened is that they do not track (and report) your original cost basis for 1099-B purposes. That is because it is an RSU. Instead, they just reported gross proceeds ($5200) and $0 for everything else. On your Schedule D you adjust the basis to the correct one, and as a comment you add that it was reported on W2 of the previous year. You then report the correct $1200 gain. You keep the documentation you have to back this up in case of questions (which shouldn't happen, since it will match what was indeed reported on your W2). You should consult a US CPA to ensure your situation is handled correctly.  It appears, the money is Israel source income and not US source income regardless if you receive it while living in the U.S. If you file the correct form, I suspect the form is 1040NR and your state form to disclose your income, if any, in 2015 and 2016, it should not be a problem. Having said that, if you do earn any type of income while in the U.S. , you are required to disclose it to both the IRS and state. "That's a tricky question and you should consult a tax professional that specializes on taxation of non-resident aliens and foreign expats. You should also consider the provisions of the tax treaty, if your country has one with the US. I would suggest you not to seek a ""free advice"" on internet forums, as the costs of making a mistake may be hefty. Generally, sales of stocks is not considered trade or business effectively connected to the US if that's your only activity. However, being this ESPP stock may make it connected to providing personal services, which makes it effectively connected. I'm assuming that since you're filing 1040NR, taxes were withheld by the broker, which means the broker considered this effectively connected income." Your withholding is taken out of your pay. So if you do YTD+withholding - you count the withholding twice, that's why it doesn't add up for you. The simple answer is to check your written contract/offer letter. See if it matches what you see, or what you expected to see. If the offer/contract states $36K - check with the payroll person at work why the discrepancy. If you don't have any written proof of the agreed amounts (don't know if it is legal, check local laws on the requirements of documenting employment terms), then it is up to you and your employer to sort it out. However, keep in mind: if you don't have any written proof and the employer is unwilling to adjust - one (judge?) would wonder: you've been getting paychecks monthly, which clearly state that your annual salary is $35K. Why did you wait so long to sort this out? It matters because that is the requirement for the 83(b) selection to be valid. Since the context is 83(b) election, I assume you got stocks/options as compensation and didn't pay for them the FMV, thus it should have been included in your income for that year. If you didn't include the election letter - I can only guess that you also didn't include the income. Hence - you lost your election. If you did include the income and paid the tax accordingly, or if no tax was due (you actually paid the FMV), you may try amending the return and attaching the letter, but I'd suggest talking to a professional before doing it on your own. Make sure to keep a proof (USPS certified mailing receipt) of mailing the letter within the 30 days window. Unfortunately, the tax system in the U.S. is probably more complicated than it looks to you right now. First, you need to understand that there will be taxes withheld from your paycheck, but the amount that they withhold is simply a guess.  You might pay too much or too little tax during the year.  After the year is over, you'll send in a tax return form that calculates the correct tax amount.  If you have paid too little over the year, you'll have to send in the rest, but if you've paid too much, you'll get a refund.  There are complicated formulas on how much tax the employer withholds from your paycheck, but in general, if you don't have extra income elsewhere that you need to pay tax on, you'll probably be close to breaking even at tax time. When you get your paycheck, the first thing that will be taken off is FICA, also called Social Security, Medicare, or the Payroll tax.  This is a fixed 7.65% that is taken off the gross salary.  It is not refundable and is not affected by any allowances or deductions, and does not come in to play at all on your tax return form. There are optional employee benefits that you might need to pay a portion of if you are going to take advantage of them, such as health insurance or retirement savings.  Some of these deductions are paid with before-tax money, and some are paid with after tax money. The employer will calculate how much money they are supposed to withhold for federal and state taxes (yes, California has an income tax), and the rest is yours. At tax time, the employer will give you a form W-2, which shows you the amount of your gross income after all the before-tax deductions are taken out (which is what you use to calculate your tax).  The form also shows you how much tax you have paid during the year. Form 1040 is the tax return that you use to calculate your correct tax for the year.  You start with the gross income amount from the W-2, and the first thing you do is add in any income that you didn't get a W-2 for (such as interest or investment income) and subtract any deductions that you might have that are not taxable, but were not paid through your paycheck (such as moving expenses, student loan interest, tuition, etc.)  The result is called your adjusted gross income. Next, you take off the deductions not covered in the above section (property tax, home mortgage interest, charitable giving, etc.).  You can either take the standard deduction ($6,300 if you are single), or if you have more deductions in this category than that, you can itemize your deductions and declare the correct amount. After that, you subtract more for exemptions.  You can claim yourself as an exemption unless you are considered a dependent of someone else and they are claiming you as a dependent.  If you claim yourself, you take off another $4,000 from your income. What you are left with is your taxable income for the year.  This is the amount you would use to calculate your tax based on the bracket table you found. California has an income tax, and just like the federal tax, some state taxes will be deducted from your paycheck, and you'll need to fill out a state tax return form after the year is over to calculate the correct state tax and either request a refund or pay the remainder of the tax.  I don't have any experience with the California income tax, but there are details on the rates on this page from the State of California. There are still ways that the default values on the W4 can lead you to get a refund or owe the IRS. If there was a big delta in your paychecks, it can lead to problems. If you make 260,000 and get 26 paychecks that means each check had a gross of 10,000. Your company will withhold the same amount from each check. But If you earned a big bonus then the smaller regular paychecks may not have been withholding enough.  When bonus checks are involved the payroll office has to treat them as irregular pay to be able to make it work out. Some companies don't do this, so you may under or over pay during the year. If you changed companies during the year, this can lead to under or over payment. The lower paying company would not know about the higher rate of pay at the other company. so at one you would under pay, and the other you would over pay. There are also social security issues with more than one employer. This answer fills in some of the details you are unsure about, since I'm further along than you. I bought the ESPP shares in 2012.  I didn't sell immediately, but in 2015, so I qualify for the long-term capital gains rate. Here's how it was reported: The 15% discount was reported on a W2 as  it was also mentioned twice in the info box (not all of my W2's come with one of these) but also  This showed the sale trade, with my cost basis as the discounted price of $5000. And for interests sake, I also got the following in 2012: WARNING! This means that just going ahead and entering the numbers means you will be taxed twice! once as income and once as capital gains. I only noticed this was happening because I no longer worked for the company, so this W2 only had this one item on it. This is another example of the US tax system baffling me with its blend of obsessive compulsive need for documentation coupled with inexplicably missing information that's critical to sensible accounting. The 1099 documents must (says the IRS since 2015) show the basis value as the award price (your discounted price).   So reading the form 8949: Note: If you checked Box D above but the basis reported to the IRS was   incorrect, enter in column (e) the basis as reported to the IRS, and   enter an adjustment in column (g) to correct the basis. We discover the number is incorrect and must adjust.  The actual value you need to adjust it by may be reported on your 1099, but also may not (I have examples of both). I calculated the required adjustment by looking at the W2, as detailed above. I gleaned this information from the following documents provided by my stock management company (you should the tax resources section of your provider): This is wrong.  It should be  or  Now, to get back to self-employment tax.  Self-employment tax is weird.  It's a business tax.  From the IRS perspective, any self-employed person is a business.  So, take your income X and divide by 1.0765 (6.2% Social Security and 1.45% Medicare).  This gives your personal income.  Now, to calculate the tax that you have to pay, multiply that by .153 (since you have to pay both the worker and employer shares of the tax).   So new calculation  or they actually let you do  which is better for you (smaller).   And your other calculations change apace.   And like I said, you can simplify Q1se to  and your payment would be  Now, to get to the second quarter.  Like I said, I'd calculate the income through the second quarter.  So recalculate A based on your new numbers and use that to calculate Q2i.   or  Note that this includes income from both the first and second quarters.  We'll reduce to just the second quarter later.  This also has you paying for all of June even though you may not have been paid when you make the withholding payment.  That's what they want you to do.   But we aren't done yet.  Your actual payment should be  or  Because Q2ft and Q2se are what you owe for the year so far.  Q1ft + Q1se is what you've already paid.  So you subtract those from what you need to pay in the second quarter.  In future quarters, this would be  All that said, don't stress about it.  As a practical matter, so long as you don't owe $1000 or more when you file your actual tax return, they aren't going to care.  So just make sure that your total payments match by the payment you make January 15th.   I'm not going to try to calculate for the state.  For one thing, I don't know if your state uses Q1i or Q1pi as its base.  Different states may have different rules on that.  If you can't figure it out, just use Q1i, as that's the bigger one.  Fix it when you file your annual return.  The difference in withholding is going to be relatively small anyway, less than 1% of your income. "How/when does my employer find out? Do they get a report from their   bank stating that ""check 1234 for $1212.12 paid to John Doe was never   deposited"" or does it manifest itself as an eventual accounting   discrepancy that somebody has to work to hunt down? The accounting department or the payroll company they use will report that the check was not deposited. The bank has no idea that a check was written, but the accounting deportment will know.  The bank reports on all the checks that were cashed. Accounting cares because the un-cashed check for $1212.12 is a liability. They have to keep enough money in the bank to pay all the liabilities. It shouldn't be hard for them to track down the discrepancy, they will know what checks are outstanding. Can my employer punish me for refusing the money in this way? Do they   have any means to force me to take what I am ""owed?"" They can't punish you. But at some time in the future they will will tell their bank not to honor the check. They will assume that it was lost or misplaced, and they will issue a new one to you.  When tax time comes, and I still have not accepted the money, would it   be appropriate to adjust my reported income down by the refused   amount? You can't decide not to report it. The company knows that in year X they gave you a check for the money. They are required to report it, since they also withheld money for Federal taxes, state taxes, payroll taxes, 401K, insurance. They also count your pay as a business expense.  If you try and adjust the numbers on the W-2  the IRS will note the discrepancy and want more information. Remember the IRS get a copy of every W-2.  The employer has to report it because some people who aren't organized may not have cashed a December check before the company has to generate the W-2 in late January. It would confuse everything if they could skip reporting income just because a check wasn't cashed by the time they had to generate the W-2." It sounded an interesting question, so I looked it up. The reason I asked about the tax years is because it matters. If the bonus was paid, and then returned in the same year - it should not appear on your W2 at all, and your taxes would be calculated accordingly. You might end up with overpayment of FICA taxes, but you can get that credited on your tax return. If, however, the repayment is not in the same year as the payment, it becomes more complicated. The code section that deals with it is 26 USC § 1341. What it says, in short, is this: you can deduct the repaid amount from your current taxable income, but only if its more than $3000. The tax benefit of such deduction cannot exceed the actual tax paid on this in the year when you got the bonus (i.e.: you need to calculate that year with the amount, and without the amount - the credit cannot exceed the difference). But it can also not exceed the amount you would be paying on that amount in the current year (i.e.: if current taxes are less than that year - you lost the difference). If the signing bonus is less than $3000 and it spans across tax years - you cannot deduct it. Bummer.