After burning the midnight oil twice in a row, I think I’ve figured out what Our Beloved Employer did to my W-2. In spite of an announcement from On High that our January 4 paycheck would represent our salaries for the last two weeks of 2007, OBE did not include this pay on the W-2 forms. That skewed the figures to make it appear the gross pay on the W-2 was, in my case, about $1,000 short. When asked about this, OBE’s PeopleSoft factotum replied that I wasn’t taking into account my deductions and withholding . . . which happen to come to something over $5,000, not to $1,005.

After much arithmetic (difficult for a person who can’t add figures that are larger than the number of her fingers and toes) and much wrestling with Quicken, last weekend’s rant to the lawyer is shortened down to a mere page:

February 20, 2008

Hi, Rita—

Here’s the paperwork for this year’s taxes. It’s a fine mess!

When PeopleSoft took over GDU’s payroll, they blindfolded all the employees, turned them around and around in place 100 times, and then told them the world is supposed to look like it’s spinning. So many errors were promulgated and so much double-talk was issued that I can’t even begin to follow it.

All I know is I’m pretty sure something is wrong in the W-2. I think it’s not to my advantage.

Here is what I believe is the story:

The paycheck that covered the last two weeks in December was posted on January 4. The pay statement shows the year-to-date amounts as posting to 2008, not to 2007. The tax withholdings and deductions posted under YTD amounts are the figures shown on the paycheck. Those figures should have gone into the 2007 YTD amounts; they should not appear as 2008 YTD amounts.

The W-2 apparently reflects this error. It evidently shows the amount I had earned by 12/16/07, not the total that would appear if you added in my last 2007 paycheck. 

When asked why the W-2 did not jibe with my 2007 pay, McE*****’s people said the W-2 box 1 figure shows my gross pay less pre-tax deductions. But that doesn’t add up.

I believe my total pay in 2007 was $61,702.02. This is the figure you get when you add one extra paycheck to the gross amount I was paid by 12/16/07:

$59,298.61 + 2,403.41 = $61,702.02

I think the total amount of my deductions, including medical & dental insurance, parking, and 403b contributions, was about $5,156. If that is correct, the amount that should appear in box 1 is $56,546:

$61,702.02 - $5,156 = $56,546

But the amount that appears on the W-2 is $54,143.72.  That’s $2,403 off, exactly the amount of one of my paychecks.

Consequently, what has happened here is that GDU is telling the government I earned $2,403 less than I actually earned in 2007, and in 2008 it will say I earned $2,403 more than I actually will earn.

Because this spring I will earn $14,000 from teaching, this bookkeeping quirk will push me into the AMT bracket in 2008:

I attach the January 4 paycheck, so you can see that the itemized figures for that paycheck indeed are posted in 2008. I also entered all the data for all my 2007 paychecks in Quicken and printed a category report; this shows the 2007 gross pay that was issued to me during the calendar year 2007, and it also breaks down all the figures that show on the paychecks. And I attach an Excel spreadsheet showing, in red, the many errors GDU made during the second half of 2007.

We were told that the January 2008 paycheck reflects the last 2007 pay period. However, that is not how GDU has posted it, and that is not how it appears on the W-2. When I asked for a correct W-2, I got a runaround. Got a clue what we should do?

best,

                                                        〜vh

In the wee hours this morning, I shot off an e-mail to Our Beloved Employer’s factotum  pointing out that the amount I earned last year, $61,702 adjusted to reflect deductions and withholding (that would be $56,546), is what should appear on my W-2, not a fictitious amount that does omits some of my 2007 salary. Here is his response:

The IRS rules dictate that earnings are counted when you receive them, not when you earn them. Your pay on Jan 4, 2008 ($ 2403) is counted towards 2008 earnings. This is consistent with IRS regulations. In years past you were paid semi monthly on the 15th and the 30th. If you were paid Dec 30, 2007, then these wages would count on your 2007 W-2, because you received the pay before the end of 2007. This same scenario will occur in this fall, earnings for the end of 2008 will be paid in 2009.

Here's a link for an IRS publication. This describes how we handle tax deposits but you will see numerous references to how the IRS differentiate between when wages are earned and when they are paid.

 
http://www.irs.gov/pub/irs-pdf/i941sb.pdf

I trust this addresses your concern.

M*** McE******, SPHR
Great Desert University
(800) 555-1212

Essentially, by deferring payment of the last 2007 paycheck (payable on December 30) to January 4, they rolled the amount employees earned in that pay period into 2008, cutting everyone’s 2007 income and inflating everyone’s 2008 income. The final December 2008 payday will fall almost at the end of the month, so that the first January 2009 check will include only a few 2008 days. For some of us, such as, oh, say, moi, that sweet little favor will push 2009 tax bills into the AMT bracket.

If adding extra injury to the initial injury of cutting my de facto pay by more than $200 a month can be called “addressing my concerns,” I suppose that’s what this does. That’s not the term I’d use for it, though.

Related post: PeopleSoft, Meet My Tax Lawyer 

personal finance, biweekly pay, workplace issues