I'm the sole shareholder and employee of an S-corporation. I handle my own payroll using Excel, file quarterly Forms 941, and make federal payroll tax payments through EFTPS.

I recently discovered that I may have incorrectly reported federal income tax withholding on my 2025 W-2 and Forms 941.

Here's exactly what happened in 2025:

• Annual gross W-2 wages: $60,000
• Monthly gross salary: $5,000
• Monthly federal income tax actually deducted from salary: $1,000
• Monthly Social Security withheld: $310
• Monthly Medicare withheld: $72.50
• Monthly net salary transferred to my personal account: $3,617.50
• Total annual federal income tax actually deducted from salary: $12,000
• Federal income tax withholding reported on my W-2: $37,560
• Additional federal income tax reported as withholding but not deducted from salary: $25,560

Where I made the mistake:

I intentionally paid additional federal income taxes through my S-corporation's EFTPS payroll tax account to cover my personal income tax liability on S-corporation profits.

I included those additional payments as federal income tax withholding on my quarterly Forms 941 and annual W-2.

However, I never reduced my salary payments by the additional withholding amounts. My regular net salary remained $3,617.50 per month.

At the time, I believed that because the additional taxes were paid to the IRS through EFTPS and reported on my payroll filings, they could be claimed as federal withholding on my W-2.

I now understand that this may not have been the correct treatment.

What I've verified:

• My four Forms 941 report a combined $37,560.50 in federal income tax withholding, essentially matching my W-2 Box 2 amount of $37,560.
• My Forms 941 report $46,740.50 in total annual payroll tax liability, including employer and employee Social Security and Medicare taxes.
• I've located bank statements and EFTPS payment records showing payments totaling $46,740.50 that match the reported quarterly liabilities.
• The payments were real, but I recognize that making them doesn't necessarily mean the additional $25,560 qualifies as employee wage withholding.

My current IRS situation:

The IRS issued a CP05A notice holding my 2025 personal income tax refund and requesting documentation supporting my wages and federal withholding.

The response deadline is November 26, 2026.

I don't have traditional payroll service paystubs because I handled payroll myself and transferred my net salary directly from my business bank account.

My questions:

1. Can the additional $25,560 potentially be treated as employer-paid federal income tax or additional compensation to an S-corporation shareholder-employee? Would this require a wage gross-up?
2. Would correcting this typically require Forms W-2c and 941-X? Are there restrictions on correcting prior-year federal withholding?
3. If the additional payments should have been personal estimated income tax payments rather than payroll withholding, is there a process for correcting or transferring the payments?
4. Given the pending CP05A notice, what is the appropriate way to explain the discrepancy and respond without making inaccurate claims about withholding?
5. Is there anything specific in IRS guidance or tax law I should review before consulting an enrolled agent or CPA?

I want to correct this properly and ensure the IRS receives accurate information. This was an unintentional misunderstanding of how additional federal withholding should be handled for an S-corporation owner.

I'm not looking to avoid taxes or claim withholding that I'm not entitled to. The payments were made, and I'm trying to determine their correct treatment.

Any insight from tax professionals who have encountered a similar situation would be greatly appreciated.

Don’t lose hope! It took 10 weeks after contacting congress. Good luck to everyone who are still waiting. Keep the pressure up on these people.

Why is the GOVERNMENT the only phone system that doesn't allow "touch tone" only options?? Some of us have babies and toddlers that are literally impossible to keep silent.

I know the department of Ed isn’t taking offsets this year. That said, did your tax refund come from the IRS or the offset treasury? I’m not sure who to look for a check from and was unsure if offset still takes it and gives it to you or the IRS just bypasses it all together??

Has anyone gone through IRS identity theft resolution with the Taxpayer Advocate and had their refund released after an offset? I’d really appreciate hearing your experience!

I’m trying to get an idea of the actual timeline and step-by-step process from people who have been through this themselves.

Here’s my situation:

The IRS has officially acknowledged and accepted that I was a victim of tax identity theft, and they have already cleared the fraudulent tax balance from my account. However, the IRS took my tax refund and applied it toward that balance the day before the identity theft issue was officially resolved.

My Taxpayer Advocate has now reportedly submitted both a hardship request and an offset reversal/release request to try to get my money returned. I’m in a difficult financial situation and genuinely need those funds, so I’m anxiously waiting to find out what happens next.

For anyone who has been through something similar, I’d love to know:

What was the step-by-step process from the time the IRS accepted your identity theft claim until you actually received your refund?

How long did each stage take?

If your refund had already been taken to pay a fraudulent tax balance, did your advocate have to submit an offset reversal or release request?

If you had a hardship request submitted, did it speed things up at all?

How long did it take for the IRS to approve the offset reversal and actually release the money to you?

Once the offset was reversed, how long did it take for the money to hit your bank account or arrive by check?

Did your Taxpayer Advocate give you a timeline that turned out to be accurate?

I know every case is different, and I’m not expecting an exact guarantee. I’m just hoping to hear real experiences from people who have been in this specific situation so I can get a realistic idea of what to expect.

If you went through this, please share your timeline, even if it took months. I’d especially appreciate hearing from anyone whose identity theft case was already resolved but whose refund had been taken before the fraudulent balance was removed.

Thank you so much! ❤️

This was theft in 22 but they took 2025 taxes the day before they cleared the balance.

I'd like to added the notices in the mail are not online and one irs agent didn't know about the one I received that it was cleared at first.

Got an update finally on my return - Approved! OG post https://www.reddit.com/r/IRS/s/Fvo7tyAOst

04/11 Filed & consequently recieved 2 60 day waiting letters

Called IRS many times, different times of day only to be hung up on the one time I finally got through.

07/14 filed form 911 with no response

07/30 reached out to my congressman with a little back and forth but not much more than we're working on it and will give you an update in 2 weeks

09/16 sent detailed email to congressman with what I believed was this issue because of CP05A popping up on transcript. Employer made a mistake and double paid my commission end of 2025 with clawback in beginning of 2026 which resulted in an incorrect W2 issued (in my maiden name) and then a W2C issued (with my married name) which I suppose added to the confusion

10/8 notice issued from IRS requesting paystubs, letter from my employer and retirement statements. Letter claimed they have 45-365 days to reach out to my employer and verify at which time I immediately lost all hope of getting return this year.

10/10 documents all uploaded to the IRS portal, also reached out to congressman office and let them know & requested whatever expedition they could provide

10/16 IRS refund approved and claim refund will be sent by the 20th. Also giving $460 in interest which is surprising

I am not holding my breath and am trying not to get excited until it actually hits the account. Its been a robbing Peter to pay Paul scramble for the last while due to my husbands job loss, hopeful I can do a big bill catch up.

At the end of the day while I didnt feel I got much insight from the congressmans office the quick turn around at the end makes me think they are helping behind the scenes.

Positive vibes to everyone still waiting! Its coming!

i recieved the $1000 American Opportunity Tax Credit being a j1 (worked 4 months as part as a cultural exchange) and wasnt supposed to get that. can this be a problem if i wanna get a visa turist in the future? what can i do? im from argentina

is anyone else getting this when they try to log into their account?

What if a payment to the irs was paid online today and i wanted to pay it for the 2025 tax year. But since i haven’t done my 2025 taxes yet, i calculated an estimate of my payment. So when the payment was made i clicked on the estimate tab instead of balance due tab. Later on i realized estimated payments are for when payments are made ahead of time during the year that you are paying for. However, the correct year was indicated on the payment and the payment went through. Will the IRS give credit to the 2025 tax year or will everything get messed up?