Former payroll specialist here. One thing to consider is HOW MUCH the difference will be. If the only change is bonus pay being recategorized from tips to regular income, the tax withholding might actually be pretty similar. The main difference would be that Social Security and Medicare taxes might have been under-withheld if they were incorrectly treated as tips (depending on if tip credits were applied). For most employees at a restaurant, this difference might not be huge. Ask your payroll provider to give you an estimate of the difference for a typical employee. If it's minimal (like under $200), filing now and amending later might make sense for folks who need refunds ASAP.

I've been in restaurant management for 15+ years and dealt with this EXACT situation in 2020. Here's what we learned: For our servers who really needed their refund $$$ fast, we advised them to: 1) File now with incorrect W-2 2) Get their refund 3) File 1040-X amendment after corrected W-2 arrived 4) Either pay back any difference or get additional refund For kitchen staff and managers who could wait, we suggested filing an extension to avoid the amendment hassle. The payroll company should offer to pay for tax amendment services for affected employees! Push them hard on this - it was THEIR error. Our payroll provider ended up giving us H&R Block vouchers for all affected employees to cover amendment costs.

Has anyone else noticed that the IRS instructions for Schedule E are super confusing about these formatting issues? I swear they purposely make this stuff complicated. Last year I actually misinterpreted a backslash in the address field and ended up having my form rejected because I literally typed a backslash character instead of separating the information correctly.

Quick note for anyone in the future searching about backslashes on tax forms - my accountant told me that sometimes backslashes are used when combining multiple properties in one entry on Schedule E. If you have multiple rental properties, make sure you're tracking income and expenses separately for each one, even if they get combined with backslashes on the final form.

Don't forget Box 15 on your 1099-DIV should tell you how to treat the Non-Dividend Distribution. There are different codes that indicate if it's a return of capital (ROC) or something else. Most commonly it's code "R" for return of capital, which is when you reduce your basis. If the amount exceeds your basis, you record a capital gain. It's actually not that complicated once you understand the principle - they're basically returning part of your investment back to you tax-free, but tracking it by reducing your cost basis.

Just a tip - I use FreeTaxUSA for filing and it handles this situation really well. When you enter the 1099-DIV information, there's a specific field for non-dividend distributions. Then when you enter the stock sales info, it prompts you to adjust the cost basis accordingly. Much easier than trying to figure it all out manually. If the distributions are return of capital (which they usually are), the software automatically adjusts the basis. It's saved me a ton of headaches with my investment reporting.

Don't overlook the Tax Institute's student guides! They were a lifesaver for me last year. They're written in much more straightforward language than the bigger textbooks and focus on practical applications. Still a bit pricey but worth every cent imo.

Whatever book you get, supplement it with PwC's tax summaries - they're free online and way more readable than most textbooks. Helped me get thru my taxation subjects without losing my mind lol

One thing nobody's mentioned - make sure you're using the CORRECT 2020 tax forms! Don't just download current forms from the IRS website. You need the actual 2020 versions since tax laws change every year. You can find prior year forms here: https://www.irs.gov/forms-instructions (just search for the form number and select 2020 from the dropdown).

Don't forget that if you're filing a 2020 return now, any stimulus payments you received for that tax year need to be accounted for correctly on the return! The first two stimulus payments were tied to 2020 taxes (the $1,200 CARES Act payment and the $600 December 2020 payment). If you didn't receive these payments back then, you can claim them as the Recovery Rebate Credit on your 2020 return. But if you did receive them, you need to indicate that so you don't accidentally claim them again.