I had a client with a W2 that showed wages (box 1) of 1500 but social wages (box 3) and medicare wages (box 9) each showing $9. There is no explanation for the discrepancy. Client contacted the company and was promptly told "You can ignore the W2. It's a lodging credit that we report to the IRS."
Has anyone encountered a similar situation or could shed some light on this?
IGNORE the W2? HAH! At your peril.
Reminds me of young fellow dropped in yesterday and when I asked about other income, he confessed he had worked for local newspaper, but since total was under 600$, they told him he didn't have to report it.
ChEAr$$$, Harlan Lunsford, EA n LA
This is more the rule than the exception, I'm afraid. I participate in a lot of broadcast stations' promotional programs, and run into lots of fellow promo program addicts who fervently believe that if they don't receive a 1099-MISC for their booty, they are under no obligation to pay taxes on it.
Likewise, I know people who gamble recreationally. When their slot machine wins exceed $1,200 (in any given payout), they receive a W-2G, and they're very careful to subtract off their slot "contributions" against the income. When their jackpots are below $1,200, they don't get a W-2G, and they consider those winnings to be tax-free.
Sigh.
Well, I've certainly had plenty of clients with wages in box 1 and zero under SS and Medicare wages. This happens with employees of the school districts who elect out of SS in favor of the state teacher retirement plan as well as certain college students working for the institution they attend. I guess it's possible that the employee is not normally subject to FICA and the lodging credit for some reason is subject to FICA, or of course it's possible the employee is not subject to FICA and the employer handled the lodging credit incorrectly.
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