What to do about your W-2 when your employer is gone
From the March 2009 issue of Ceridian Connection.
Many of us have friends or family who lost their jobs during the economic downturn of 2008. We know they struggle, and we help them any way we can. But what many of us don't realize is that when a company goes out of business, life can present new burdens for its former employees. Something as simple as receiving a W-2 can pose a very real challenge.
"Understandable expectations" aren't being met
"It's difficult enough to lose your job," says Jill Barber, Ceridian compliance manager for Regulations. "But when you find yourself ready to file your taxes -- and you're waiting in vain for your Form W-2 to arrive -- the frustration can really build. As more businesses across America failed last year, more and more people are finding that something they counted on is no longer available to them."
Companies are required by the Internal Revenue Service to send out a Form W-2 to each of their employees and to the federal government by January 31 of each year. "The W-2 summarizes wages earned and taxes paid by an employee over the previous year," says Caroline Waldon, Ceridian product manager for SeeMyW2.
For U.S. workers, the arrival of their W-2 tax forms was something they knew would happen in January or early February every year -- and many could even view their information with online solutions such as Ceridian's SeeMyW2. "When it comes to their W-2 forms," says Barber, "most American workers have an understandable expectation of both accuracy and timely delivery. That's part of what makes it so disappointing when employers don't provide the information. It's a shock when the system fails."
How to take action
Individuals can't file a federal income tax return without providing a W-2 -- but a person will be allowed to file a form that the IRS has created for those whose Form W-2 doesn't arrive.
"IRS Form 4852 serves as a substitute for the W-2," says Barber. "When an employer goes out of business and doesn't honor its administrative duty to provide the information, the IRS will allow an individual to estimate wages and taxes using this form."
To best prepare for completion of Form 4852, Waldon recommends locating pay stubs from 2008. "Your pay stubs include a lot of valuable information," she says. "You'll be using it to estimate wages, Social Security and Medicare taxes paid, as well as federal, state and local taxes withheld. You'll also be asked to provide information about any pension or 401(k) contributions, and you'll need to provide information about your employer, too. Be ready with the correct company name and address. If you can find your former company's employer identification number (EIN), so much the better."
Cover all the details
The lack of an official employer Form W-2 doesn't necessarily equate to frustration and delay -- if you pay close attention to the details. For instance, those who complete IRS form 4852 must be prepared to explain how they determined the different figures for wages and taxes withheld. "The IRS will also ask you to explain your efforts to obtain your W-2," Barber says.
Depending upon where you live, you might also need to submit a special state form that details estimated state income tax. Check with your tax advisor or state tax office for more information.
As tax time draws near, those whose employers have gone out of business might find themselves facing the prospect of filing their taxes without a Form W-2 for the first time in their lives. If you know someone who is facing this challenge, refer them to this article. Paying close attention to the details and taking action early can make a difference for those who must overcome this tax-filing hurdle.
Many of us have friends or family who lost their jobs during the economic downturn of 2008. We know they struggle, and we help them any way we can. But what many of us don't realize is that when a company goes out of business, life can present new burdens for its former employees. Something as simple as receiving a W-2 can pose a very real challenge.
"Understandable expectations" aren't being met
"It's difficult enough to lose your job," says Jill Barber, Ceridian compliance manager for Regulations. "But when you find yourself ready to file your taxes -- and you're waiting in vain for your Form W-2 to arrive -- the frustration can really build. As more businesses across America failed last year, more and more people are finding that something they counted on is no longer available to them."
Companies are required by the Internal Revenue Service to send out a Form W-2 to each of their employees and to the federal government by January 31 of each year. "The W-2 summarizes wages earned and taxes paid by an employee over the previous year," says Caroline Waldon, Ceridian product manager for SeeMyW2.
For U.S. workers, the arrival of their W-2 tax forms was something they knew would happen in January or early February every year -- and many could even view their information with online solutions such as Ceridian's SeeMyW2. "When it comes to their W-2 forms," says Barber, "most American workers have an understandable expectation of both accuracy and timely delivery. That's part of what makes it so disappointing when employers don't provide the information. It's a shock when the system fails."
How to take action
Individuals can't file a federal income tax return without providing a W-2 -- but a person will be allowed to file a form that the IRS has created for those whose Form W-2 doesn't arrive.
"IRS Form 4852 serves as a substitute for the W-2," says Barber. "When an employer goes out of business and doesn't honor its administrative duty to provide the information, the IRS will allow an individual to estimate wages and taxes using this form."
To best prepare for completion of Form 4852, Waldon recommends locating pay stubs from 2008. "Your pay stubs include a lot of valuable information," she says. "You'll be using it to estimate wages, Social Security and Medicare taxes paid, as well as federal, state and local taxes withheld. You'll also be asked to provide information about any pension or 401(k) contributions, and you'll need to provide information about your employer, too. Be ready with the correct company name and address. If you can find your former company's employer identification number (EIN), so much the better."
Cover all the details
The lack of an official employer Form W-2 doesn't necessarily equate to frustration and delay -- if you pay close attention to the details. For instance, those who complete IRS form 4852 must be prepared to explain how they determined the different figures for wages and taxes withheld. "The IRS will also ask you to explain your efforts to obtain your W-2," Barber says.
Depending upon where you live, you might also need to submit a special state form that details estimated state income tax. Check with your tax advisor or state tax office for more information.
As tax time draws near, those whose employers have gone out of business might find themselves facing the prospect of filing their taxes without a Form W-2 for the first time in their lives. If you know someone who is facing this challenge, refer them to this article. Paying close attention to the details and taking action early can make a difference for those who must overcome this tax-filing hurdle.
| How caring companies manage W-2s
Organizations that use Ceridian SeeMyW2 give their employees an Internet solution for accurate, fast and reliable review of their Form W-2. These employers do more than provide accurate and timely W-2 data. They free their employees to use a Web browser to access meaningful information -- at work or at home. With Ceridian SeeMyW2, these companies make it easy for employees to import their W-2 into tax preparation solutions such as and TurboTax for the Web from Intuit Inc. Additionally, Ceridian has partnered with Jackson Hewitt Tax Service to offer employees of Ceridian clients discounted tax filing services. View more about discounted income tax filing from Jackson Hewitt. Employees appreciate a caring company. |
