Received W2 and 1095-C from wife's previous employer for 2018 when she quit in 2017 - what should we do?

This is actually a pretty common issue with restaurant and retail jobs. The timing makes perfect sense - your wife quit in 2017, but her final paycheck wasn't processed until 2018, which means that income is officially 2018 income for tax purposes. When it comes to income taxes, what matters is when the money was actually paid to your wife, not when she earned it. This is called the "constructive receipt" rule. If she received her final paycheck in 2018 (even for work done in 2017), it counts as 2018 income. As for the discrepancy with the specific day worked (January 4th), that could simply be payroll coding the final check. Your wife should check her final pay stub to see exactly what period it covers. If someone else was actually using her employee number, that's a separate issue you'd need to address with the employer. Regarding the 1095-C for two months - employers typically continue health insurance eligibility for a short period after employment ends, especially if the termination happens near the end of a month. They may have kept her in the system as eligible through February for administrative reasons.

I dealt with almost this exact situation last year with my previous employer! I found that https://taxr.ai was super helpful for figuring out how to handle these weird payroll timing issues. I uploaded both my W2s and the explanation letter from my former employer, and they broke down exactly how to handle it on my return. The system even created a custom letter I could keep with my tax documents explaining the situation in case I ever got audited. Much better than the confusing advice I was getting from different people online. Basically, they confirmed I had to report the income exactly as shown on the W2 even though there was a discrepancy about when I actually worked.

Just wanted to follow up - I checked out that taxr.ai site after my skeptical comment. Honestly, it was pretty helpful. I uploaded my documents from a similar situation (worked in December but paid in January), and it actually explained exactly why my W2 showed what it did and how the pay periods work across tax years. The explanation made it clear I didn't need to get a corrected W2 after all, which saved me from several more frustrating calls with my old company's HR department. They also gave me proper documentation to keep with my tax records explaining the situation, which gave me peace of mind for potential future audits.

After reading through your situation, I think you need to speak directly with the IRS to sort this out properly. I tried calling them for a similar payroll issue last year and it was IMPOSSIBLE to get through. I spent hours on hold only to get disconnected repeatedly. Then I found this service called Claimyr (https://claimyr.com) that actually got me connected to a real IRS agent in about 20 minutes instead of waiting for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent I spoke with explained exactly how to handle discrepancies between work dates and pay dates on tax documents, and helped me understand what documentation I needed to keep.

OK I need to eat my words about Claimyr. After posting my skeptical comment, I was still fighting with my own tax issue and getting nowhere with the IRS phones. I decided to try it out of desperation and... it actually worked exactly as advertised. I got connected to an IRS agent in about 35 minutes (which is LIGHT YEARS faster than my previous attempts). The agent was able to pull up my records and confirm how I should handle a similar situation with income reported in the wrong tax year. They even gave me specific instructions on what documentation to keep with my return. Definitely worth it for the time saved and the stress reduction!

Something similar happened to my husband. His company had a policy where final paychecks are held for two weeks after the last day to make sure all equipment is returned and accounts are closed properly. His last day was Dec 27, 2023 but his final check came Jan 10, 2024. His employer explained that for tax purposes, income is counted in the year it's paid, not necessarily when it's earned. For the 1095-C, most companies continue benefits until the end of the month when you terminate, and sometimes offer COBRA for a month or two after. That's probably why your wife got the form showing coverage availability for January and February.

I'm an accountant and see this issue constantly. Here's what's happening: 1) The $650 was probably her final paycheck from 2017 work, but it was issued in 2018, making it 2018 income for tax purposes. 2) The specific date they're claiming she worked in January is likely just their payroll system requiring an "event date" to process a payment, and someone just picked that date. 3) The 1095-C for two months is standard - companies typically extend COBRA eligibility for a period after termination. My advice: Just report the W2 as is on your 2018 taxes. The amount is small enough that trying to get a corrected W2 will be more hassle than it's worth. If you're really concerned about the January date showing work she didn't do, request your wife's complete time records from 2017-2018 to see what's actually recorded.