If an employer doesn't send a W-2 form, both the employer and the employee are still liable for federal income taxes. The employee will have to estimate federal gross income and provide additional information to the Internal Revenue Service (IRS), such as dates worked and rate of pay. It is the responsibility of the employer to send a W-2 to the employee.
When the employer does not send the W-2, the employee should ask the employer to provide it. According to the IRS, if the employer does not send the form to the employee by Feb.15, the employer should ask the IRS to demand the form from the employer. The IRS will then tell the employer that it must provide the form within 10 days or face penalties.
The IRS allows an employee who cannot get the W-2 from his employer to send in the substitute Form 4852. The IRS only allows an employee to turn in this form if the employer refuses to send a W-2 or the employee cannot contact the employer. Form 4852 also serves as a substitute for the income-reporting Form 1099-R in case the employee cannot get information from the manager of a pension, annuity or other investment vehicle.
Form 4852 allows an employee to estimate income to make an educated guess about her federal income tax liability. The taxpayer must explain to the IRS how this estimate was calculated. Form 4852 allows an employee to estimate many types of income, including from insurance, annuities, retirement accounts and other sources.
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The employee can be penalized for submitting an inaccurate estimate. The IRS can charge a penalty of up to 75 percent of the employee's total tax liability for civil fraud, which means that the IRS does not need to prove to a court that the employee committed criminal fraud to assess the penalty. The IRS can also fine the employee $5,000 for submitting a frivolous federal income tax return.
The employee also needs the W-2 to pay state income taxes. A state either allows a taxpayer to submit the federal Form 4852 along with the state income tax return, or provides a state version of Form 4852 that the taxpayer must submit if the state needs additional information that the federal form doesn't provide.