Taxpayer Not Receiving W-2 Form

[S T]

I have a taxpayer that has not received their W-2 form from an Employer, after repeated requests

I have pay stubs through ADP - so I can create a 4852 substitute form based on those paystubs.

Herein is my second dilemna - in that the taxpayer took the Employer to the Labor Board for unpaid wages (not including the ADP amts) (checks bounced, no payment, etc) Employer showed up and settled with a $ 5,000 check for the back wages at Labor Board - there was absoultely no breakdown on this payment

Does the $5,000 go on a 1099 misc form - in which case the T/P has to pay both the Er/Ee of Fica/Mcare

Or can I re-calculate to show on a 4852 Wage substitue (taxpayer and I already know that this amount is NOT being reported through the W-2 at ADP) or any other W-2.

In my opinion --this is one of those Employers that the State and Feds should shut down for mis-appropriation of Employee wages and associated payroll taxes. But that does not solve my Tax Reporting issues for 2012.

Thanks
Sandy

[JohnH]

Sandy: I've never dealt with something like this so this is strictly off the top of my head. I'd probably gross up the payment to $5,299.42 to cover the EE's Social Security/Med withholding. That relieves your client of the requirement to pay the roughly $299.42 that would have been withheld. True, he's then paying income tax on the $299.42, but this gets the client off the hook for the $405.41 employer portion which will essentially come into play if he reports on schedle SE.

Let the employer fight it out with IRS if they look into it and he disagress. Chances are he's going to be in so deep with the Trust Fund Recovery penalty that the $299.42 and the $405.41 will go unnoticed in the heat of the battle.

If anyone disagrees with me, presumably they know more about this than I, and you should probably follow their advice.

[S T]

Thanks John-
If I can do this - waiting for some others to chime in-

Grossing up and paying the Income tax is a possibility of t/p paying a whole lot less than the T/P paying the employer portion of FICA and MCare and Income Tax (no withholding) - Taxpayer is roughly in the 15% tax bracket Fed

Trying to wrap my thoughts around this issue

So the 4582 would look something like

$ 5,299.42 Gross
$ 222.58 Fica - EE
$ 76.84 Mcare - EE

Net 5,000 (to Taxpayer) No W-2 reported

Hmm more calculations - but I certainly would appreciate any thoughts

Sandy

[S T]

Guessing that no one has a solution to this issue that I posted, JohnH gave a thought

T/p was thinking they would receive a 1099 form for records that the employer paid another $10,000+ based on per hour - no taxes deducted Employer is not providing W-2 forms or 1099 forms - and employer is no longer returning phone calls

I don't know - but the issue is growing like "bunnies multiplying" From $ 5,000 through Labor Board wage settlement - I am now at approx $ 15,000+ through cashiers checks and replacements - no Wage earnings or 1099 forms - no payroll taxes deducted.

This just is not fair from the Taxpayer standpoint to have to suffer the FICA/Mcare taxes for both EE/ER - Rate is $ 16 per hour according to a few of the ADP stubs we have

Any suggestions on how to complete the Taxpayer's return for the income, T/p is being diligent in providing information, in fact the wife is a State Employee that processes Work Comp claims - so I have no issue with the information and documentation they are providing and they are trying to do the right thing.

I know I can take all as a 1099 - but the SE for EE/ER are pretty large on $15,000 when the T/p believed he was an employee. As a result of this he also is not able to establish Umeployment Benefits with the State.

Any thoughts or solutions would be appreciated.

Sandy

[joanmcq]

I believe that if prosecuted for not withholding, the employer owes both parts of the FICA, plus the federal taxes that should have been withheld. This is off the top of my head, and I have no cites. But you may want to look into this aspect.

[S T]

I think that is a separate issue - and this employer should be looked at and dealt with both from a Federal standpoint and California standpoint on payroll issues.

My discussion with the Taxpayer and pursuing further avenues with the Labor Board or Calif EDD has come to an end. The t/p has contacted EDD not only for UI benefits, denied, but also to report to EDD for not reporting payroll taxes, that went no where, as well.

Just trying to find a solution for tax reporting - best available for the Taxpayer.

Sandy

[geekgirldany]

Sandy, you said he has ADP stubs, plus $5,000 from the labor board, and then cash payments?

I will tell you what I am doing not sure it will help. I have a client that worked for a company for eight months. Young person who did not know that taxes were not being withheld. He received a 1099-Misc. I talked to him about it and he is going to file a SS-8 with the IRS to show his status was an employer not independent contractor. In Drake, on the 1099-Misc form there is a place to select to treat this as such with a code stating that the SS-8 has been sent into the IRS but nothing has yet to be received on it. Drake then calculates the Taxpayers portion of fica and medicare taxes.

I am sick yet again... I hope the above makes sense and can help.

D

[S T]

Thanks Dany
That does help, since I just switched to Drake. I believe the T/p would be okay with this action on filing the SS-8 form as they are no longer working there, so it will not disrupt their employment, as it has ceased

I will work in Drake and see what numbers I arrive at with this approach and have the t/p complete an ss-8 form.

Oh please tel me you are not either still sick or sick again. Hope you feel better and get well soon.

Sandy

[taxea]

Sandy I'm just thinking out loud here. The issue is that the employer did not issue W2 so the sub has to be done. How much witholding shows on the final paystub? How does the settlement document explain the payment? Does it cover the TP's taxes? I would have the client send a check to the return to cover his payroll withholding and if there is any balance put it on Ln 21 (settlement/award) not subject to SE. The explanation would be on the sub W2 and he should report the employer.