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.
Since your comment on @JoeTaxpayer's answer says that you are still under the 2012 contribution limits if the extra money is left in your 401k account, I do not think  that there is any problem for you if the money is left in the 401k account. As I understand it, your salary is $X for 2012 of which you contribute some percentage per paycheck to your 401k account. Your contributions  would have totaled $Y for 2012 if the glitch of extra money being out into your 401k account had not occurred. In the absence of the glitch, your W-2 form would have reported $X as gross wages, $(X-Y) as taxable wages and $Y as 401k contributions. Since an additional $z has been put into your 401k account, but not deducted from your paycheck, your employer could do one of two things. The extra money could be withdrawn from your 401k account by your employer. If this is done, then your W-2 form will be as described above. The extra money is not withdrawn by your employer. Your W-2 form will still report $(X-Y) as taxable wages, but $(Y+z) as the 401k contribution and $(X+z) as gross wages. Since $(Y+z) is less than the maximum 2012 contribution, everything is fine. In your position, I would very much prefer the latter alternative over the former, not just because there is a larger contribution to the 401k account with no change in tax liability, but also because there is always the possibility that HR/Payroll will screw up the withdrawal of the excess contribution so that it appears as a premature withdrawal by the participant. In this case,  the participant not only has to pay income tax on $z but also a 10% excise tax for premature withdrawal, without actually  getting even a penny from that $z taken out, which will go right back into the employer's coffers. If you had a retirement plan at any time in 2013 you are considered covered by an plan. Are You Covered by an Employer's Retirement Plan? You’re covered by an employer retirement plan for a tax year if your   employer (or your spouse’s employer) has a: Defined contribution plan (profit-sharing, 401(k), stock bonus and money purchase pension plan) and any contributions or forfeitures were   allocated to your account for the plan year ending with or within the   tax year; IRA-based plan (SEP, SARSEP or SIMPLE IRA plan) and you had an amount contributed to your IRA for the plan year that ends with or   within the tax year; or Defined benefit plan (pension plan that pays a retirement benefit spelled out in the plan) and you are eligible to participate for the   plan year ending with or within the tax year. Box 13 on the Form W-2 you receive from your employer should contain a   check in the “Retirement plan” box if you are covered. If you are   still not certain, check with your (or your spouse’s) employer. The limits on the amount you can deduct don’t affect the amount you   can contribute. However, you can never deduct more than you actually   contribute. Additional Resources: Publication 590, Individual Retirement Arrangements (IRAs) Should I have a W-2 re-issued? A W-2 can be corrected and a new copy will be filed with the IRS if your employer incorrectly reported your income and withholding on a W-2 that they issued. In this case, though the employer didn't withhold those taxes, they should not reissue the W-2 unless they plan to pay your portion of the payroll taxes that were not withheld. (If they paid your share of the taxes, that would increase your gross income.) Who pays for the FICA I should have paid last year? Both you and your employer owe 7.65% each for FICA taxes. By law your employer is required to pay their half and you are required to pay your half. Both you and your employer owe additional taxes because of this mistake. Your other questions assume that your employer will pay your portion of the taxes withheld. You employer could decide to do that, but this also assumes that it was your employer's fault that the mistakes were made. If you transitioned to resident alien but did not inform your employer, how is that your employer's fault? In general no, if you just have one employer and work there with the same salary for the whole year.  Typically an employer does tax withholding by extrapolating your monthly income to the entire year and withholding the right amount so that at the end, what is withheld is what you owe.  It's not a surprise to them when your income crosses a tax bracket threshold, because they knew how much they were paying you and knew when you would cross into another bracket, so they factored that in. If you have multiple jobs or only worked for part of the year, or if your income varied from month to month (e.g., you got a raise) there could be a discrepancy between what is withheld and what you owe, because each employer only knows about what it's paying you, not what money you may have earned from other sources.  (Even here, though, the discrepancy wouldn't be due to the tax brackets per se.)  You can adjust your withholdings on form W-4 if needed, to tell the employer to withhold more or less than they otherwise would. Are you being paid through a limited company or an umbrella company ? Are you self employed If not what they are doing is illegal. If you are being paid a salary, then the employer has to contribute their part of National Insurance. I believe they are treating you as self employed, hence asking you to generate invoices. Check your contract wordings properly. Or get help from Citizens Advice. Call them or visit their local office. Or else do call up HMRC.  But if you are invoicing them, I would assume you are self employed and you have to do your self assessment. Get in contact with HMRC and ask them to generate your Unique Taxpayer Reference (UTR). THey will send you the UTR and using this you can fill your tax returns.  It looks like cumbersome now, but it isn't so. You can do it yourself, I do mine. Or at the end of the financial year, get an accountant to do the returns for you, probably should charge you £100-£150. Keep all your invoices, bills, bank statements safely. This is some help from HMRC website Real world case: IRS:  You owe us $x.  You didn't report your income from job y. My mother:  I didn't work for y.  I don't even know who y is. IRS:  If the W-2 is wrong, talk to them to get it fixed. My mother:  I can't find y.  Please give me an address or phone. IRS:  We can't.  You talk to them and get it fixed. I know this dragged on for more than a year, they never mentioned the final outcome and they're gone now so I can't ask. To clarify that legality of this (for those that question it), this is directly from IRS Publication 926 (2014) (for household employees): If you prefer to pay your employee's social security and Medicare taxes from your own funds, do not withhold them from your employee's wages. The social security and Medicare taxes you pay to cover your employee's share must be included in the employee's wages for income tax purposes. However, they are not counted as social security and Medicare wages or as federal unemployment (FUTA) wages. I am sorry this does not answer your question entirely, but it does verify that you can do this. UPDATE:  I have finally found a direct answer to your question!  I found it here: http://www.irs.gov/instructions/i1040sh/ar01.html Form W-2 and Form W-3 If you file one or more Forms W-2, you must also file Form W-3. You must report both cash and noncash wages in box 1, as well as tips and other compensation. The completed Forms W-2 and W-3 in the example (in these instructions) show how the entries are made. For detailed information on preparing these forms, see the General Instructions for Forms W-2 and W-3. Employee's portion of taxes paid by employer.    If you paid all of your employee's share of social security and Medicare taxes, without deducting the amounts from the employee's pay, the employee's wages are increased by the amount of that tax for income tax withholding purposes. Follow steps 1 through 3 below. (See the example in these instructions.) Enter the amounts you paid on your employee's behalf in boxes 4 and 6 (do not include your share of these taxes). Add the amounts in boxes 3, 4, and 6. (However, if box 5 is greater than box 3, then add the amounts in boxes 4, 5, and 6.) Enter the total in box 1. "As you clarified in the comments, it is not a contract work but rather an additional temporary assignment with the same employer. You were paid for it in form of a ""bonus"" - one time irregular payment, instead of regular periodic payments. Irregular wage payments fall under the flat rate withholding rule (the 25% for Federal, some States have similar rules for State withholding). This is not taxes, this is withholding. Withholding is money the employer takes from your salary and forwards to the IRS on the account of your tax liability, but it is not in itself your tax liability. When you do your annual tax return, you'll calculate the actual tax you were supposed to pay, and the difference between what was withheld and your actual tax will be refunded to you (or owed by you, if not enough was withheld). You can control the regular pay withholding using W4 form."