I should have written this sooner. In this economy, with businesses collapsing around us in disarray there is bound to be an uptick in missing W-2's.
The caller queried Bill Handel about what happens when an employer doesn't issue a W-2. True to his schtick that Handel on the Law offers marginal legal advice, Bill was, well, marginal. Entertaining, but wrong. This was a particularly egregious effort by the employer to screw the employee. Not only was there no W-2 but the unemployment claim was denied when the employer claimed the guy had never been an employee.
Bill sent the poor guy to some obscure state agency with a little sympathy and a flippant remark about how the caller had been defrauded of his tax withholding. Nothing could be further from the truth.
Without belaboring the background details and getting into the civil and possible criminal ramifications facing the employer for not paying the trust fund taxes, ie, the money withheld from the employees paychecks, here is how you handle this:
- IRS and state agencies permit you to reconstruct your earnings and tax withholdings from your pay stubs. Piece of cake if you have your final pay stub. It will show all year-to-date tax withholdings. You simply transfer those totals to a Substitute W-2 form, complete the explantions, and file it with your tax return.
- Turbo Tax and Tax Cut include the Substitute W-2 form with instructions as part of the software.
- Your unemployment claim can be easily substantiated by presenting your paystubs showing tax withholdings.
Bill missed this entirely and it is important:
- The employee is credited with all income tax and social security withholdings. This true regardless of whether the employer pays those taxes she withheld from your check to the government.