Hi,
I got following payments in 2010 from my employer.
1) Paid in cash of total 2500 $ from 14th Sept' 2010 to 5th Dec. 2010. (Was not on project that time. So was not getting full salary). But this pay is shown as "advanced paid" in my pay stub dated 31st Dec.
2) Paid by cheque 461 $ on 16th Dec. for pay period 29th to 30th Nov.
3) Paid as direrct deposit 1567 $ on 31st December 2010. (for pay period 1 to 15 dec.)

Out of all these 3 pay, my employer considered only the 2nd item as 2010 income. And deducted the tax only on 461 and show it in W-2. And rest he considered as 2011 income and shown the dedcuction for that pay under 2011 income.
So its depend on employee to consider pay as income of any year, irrespective of the actual payament date of it?

Will really appreciate your answer.

Thanks.

If you actually received income in 2010, then it must be reported as income in 2010. As for specifics:

For (1): It sounds like you were not an employee of the company at the time of this payment to you - is that correct? Consequently it is not reported on your W2. However, it should be reported on a 1099 form. Did they give you a 1099-MISC form? No taxes would have been withheld, but you must report it to the IRS as income.

For (3) - when was the deposit actually made into your bank account (never mind what the pay stub says)? Check your bank records on this - if it was actually deposited on Dec 31 or before then it should be reported as 2010 income on your W2. But if it was Jan 2 or later then it it is counted as 2011 income. One of my former employers did it that way - the Dec 31 paycheck each year was actually paid out on Jan 2 and so counted as income in the following year.

Hi ebaines,

Thanks for your reply.

1) I was the employee of the compnay from 14th Sept. the day I entered in US on H1B. But got 1000 dollar per month till date I got project. I started project on 29th nov. so from that date I am getting full salary. Further all 2500 dollar I received by cheque.

3) The deposit was made on 31st December in my bank account. I checked it.

So my issue is if he has considered the pay (1) and (3) as 2010 income, I can have claimed refund on the tax deducted because even after considering all pay in 2010 my total income will not be taxable. But now I have to pay the tax on 1) and 3) as they are considered as 2011 income and my 2011 income.
My emplyer has sent me W-2 with such calculations? Is there any way I can have my employer change the W-2 form?

Hi ebaines,

Thanks for your reply.

1) I was the employee of the compnay from 14th Sept. the day I entered in US on H1B. But got 1000 dollar per month till date I got project. I started project on 29th nov. so from that date I am getting full salary. Further all 2500 dollar I received by cheque.

3) The deposit was made on 31st December in my bank account. I checked it.

So my issue is if he has considered the pay (1) and (3) as 2010 income, I can have claimed refund on the tax deducted because even after considering all pay in 2010 my total income will not be taxable. But now I have to pay the tax on 1) and 3) as they are considered as 2011 income and my 2011 income.
My emplyer has sent me W-2 with such calculations? Is there any way I can have my employer change the W-2 form?

One more question: did your employer have you fill out a W4 form on September 14? Or did they wait until you started the project in November?

It seems to me that either one of two things should have happened - either your W2 should report all three payments, or you should receive a W2 plus a 1099. Either way all three payments must be reported as 2010 income. So I suggest you ask your payroll department to explain why your W2 shows only the $461 amount.