RECOMMENDATION 01004-001
RECOMMENDATION TEXT:
Recommendation: Add a new section titled “Reconciling W-2 Withholding with Reported Income” after the income section (Form 1040, Line 9) and before the deductions or credits section on Form 1040-NR (or the corresponding section in electronic filing platforms). This section would address situations where W-2 box 2 wages exceed total income on Form 1040, line 9. . Justification: This section should address situations where W-2 Box 2 (Federal Income Tax Withheld) exceeds the income reported on: Form 1040, Line 9 (Total Income), or
Form 1040-NR, Line 9 (Effectively Connected Income).
IRS Action: Recommended
RECOMMENDATION 01004-002
RECOMMENDATION TEXT:
Recommendation: Include a checkbox on Form 1040-NR (and corresponding e-filing system) that asks: “Check this box if your W-2 Box 2 (Federal Income Tax Withheld) exceeds your total income as reported on Form 1040, Line 9.” Justification: It helps tax preparers and IRS agents identify cases requiring further review, which reduces the risk of incorrect tax calculations or processing delays.
IRS Action: Recommended
RECOMMENDATION 01004-003
RECOMMENDATION TEXT:
Recommendation: See recommendation above #3620 Below the checkbox, include a statement outlining the required supporting documentation that must be submitted in both Form 1040-NR and electronically: • “If you checked the box above, please attach the following supporting documentation to explain the discrepancy: 1. An explanation of the nature of the discrepancy (e.g., reason for additional wage reporting, incorrect form details). 2. Copies of any related forms or statements that explain the situation (e.g., corrected W-2, 1099 forms, or other income-related documents). 3. Any other documents requested by the IRS to substantiate the discrepancy.” Justification: By requiring supporting documentation, taxpayers will provide the necessary information to resolve the discrepancy upfront.
IRS Action: Recommended
RECOMMENDATION 01004-004
RECOMMENDATION TEXT:
Recommendation: Provide clear instructions in Form 1040-NR (or as part of the e-filing process) explaining why the checkbox exists, what it means, and what the taxpayer must do if they check it: “If you checked the box above, please attach a detailed explanation of the discrepancy and any relevant supporting documentation. Failure to do so may delay processing or result in incorrect tax calculations.” Justification: Clear instructions help ensure that taxpayers understand the purpose of the checkbox and the steps they need to take to resolve the issue.
IRS Action: Recommended
RECOMMENDATION 01004-005
RECOMMENDATION TEXT:
Recommendation: Allow electronic filers to upload supporting documentation directly through the e-filing platform (e.g., corrected W-2 forms, 1099 forms, or written explanations) when they check the discrepancy box. Justification: Allowing taxpayers to upload all necessary documentation electronically ensures that the IRS has all relevant information at the time of filing. This reduces the need for additional follow-up and accelerates the review process for both paper and electronic submissions.
IRS Action: Recommended
RECOMMENDATION 01004-006
RECOMMENDATION TEXT:
Recommendation: Include an automatic flag in the IRS’s electronic processing system to alert IRS agents when a filer has marked the checkbox indicating a W-2 box 2 wages vs. Form 1040 total income discrepancy. This ensures IRS agents review these returns with extra attention and avoid processing errors. Justification: It would ensure that cases involving discrepancies between W-2 wages and total income are handled with the necessary scrutiny, reducing errors and taxpayer burden.