Bankrupt Without W-2

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Today TaxMama hears from Andrew in TaxQuips forum, with this problem. “I worked for a company that went bankrupt; now I’m not getting a W-2. I didn’t keep my final pay stub. I have no way of knowing how much I made while working for the company. What now?”

Dear Andrew,

That’s a real bummer. Just curious, why did you not keep your final paystub?

It seems to me, even as a teenager, I had the good sense to hang on to things like that to make sure the company produced the correct information on that year-end W-2. (Of course, things were done manually then, so there was more room for error, back in the dark ages.)

First thing to do? Contact the Bankruptcy court and see if they have any information for you. When a company files bankruptcy, the court assigns a trustee. They may have records. If they do, that will save you time and money.

If they don’t, then, it’s going to cost you to reconstruct your income.

If you have any paperwork showing your hourly rate, that would be nice. Do you have any idea how many hours you worked each week? Sit down with a calendar and try to reconstruct your hours worked each week. If you had overtime, or were apt to have had overtime, put it down. Do your best. We know it probably won’t be accurate. But try.

Do you have a copy of your W-4, showing how many exemptions you claimed. If not, perhaps you can remember. Did you claim a lot so you wouldn’t have much withheld? Or did you claim just 1 for yourself?

Go to a good, local tax professional. Bring copies of your
bank statements showing your deposits. (You DID deposit the checks didn’t you? If you cashed them instead, it’s going to be really hard to prove your case!) Bring all the things you prepared.

S/he will help you recompute your payroll and create a substitute W-2 form for you – for IRS and State, using Form 4852 – http://www.irs.gov/pub/irs-pdf/f4852.pdf

And yes, you do need to report the income. If not, it will catch up with you later, with penalties and interest. After all, your income information was probably reported to your state each quarter, with your Social Security Number.

Keep an eye on this question – or today’s TaxQuip. Perhaps someone else has some better ideas.

And remember, you can find answers to all kinds of questions about business expenses and other tax issues, free. Where? Where else? At TaxMama.com.

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14 thoughts on “Bankrupt Without W-2

  1. Andrew Konderla says:

    Ok, I have the exact amount I made, now to figure out how much was withheld, I know that I claimed 0 exemptions/allowances, so that should be easy right? Just get the percentage that would have been withheld, and it should be correct…..so how do I go about finding this percentage?

  2. TaxMama says:

    Excellent Andrew,

    Did you ask her to give it to you in writing?

    It would help, to attach to your subsctitute W-2. If you can BEAR to sit there for another 20 minutes, ask them to send you the written report, or to fax it to you.

  3. Andrew Konderla says:

    wow, Cindy thank you so much, I was on hold with them for about 20 minutes, but I talked to the lady for less than 2, and she had the information for me, I actually have the exact amount the company reported I made.

  4. Cindy Campbell says:

    Try checking with your state unemployment bureau to verify the amount of gross wages that were reported under your name & social security number for each quarter. I’m pretty sure that in just about every state the quarterly UI reports must be broken down my individual employees. At least this would give you a good place to start.

  5. TaxMama says:

    Hi Andrew,

    Do you know how to compute payroll?
    To come up with the withholding for each paycheck, etc?
    If you can, then sure, build a spreadsheet and do it yourself.
    Since you are generating information from scratch, without a paystub or anything, I would attach a copy of the spreadsheet to the Form 4852 – and file the tax return on paper, not electronically. Include an explanation, telling IRS why you do not expect to ever get a W-2.

    You will find the IRS withholding tables in IRS Publication 15
    http://www.irs.gov/publications/p15/index.html

    You can go to your state’s website to find their tables. There’s a link to all the state’s tax sites on TaxMama’s Quick Look-Ups Resource Page
    http://taxmama.wpengine.com/free-member-resources/

    Try to do it yourself. It’s good exercise. Who knows, you may become inspired to become a tax professional yourself.

    Have fun!

  6. A A "Toni" McIntyre, CPA, E. A. says:

    If you feel confident you can come up with reasonably accurate numbers yourself you do not have to get anyone else involved. However, I too would recommend that you do.

  7. Andrew Konderla says:

    Thanks for all the information, you said that I would need a tax pro. to file the 4852, is that necessary, or can I do it myself?

  8. TaxMama says:

    Hi Andrew,

    Thanks for the tip.

    Normally, that would be a good idea. At least for companies that file W-2s.

    But the quarterly 941s do not contain breakdowns of wages by employee and SSN. So, if the company shut down before W-2s were filed, IRS won’t have that information.

    The only place that might, is the state – if the state, like California, collects the information on gross wages by employee. They still won’t have the specific withholding per employee – just the total state income tax withheld by the company for the quarter. But, at least, getting the wages will be a starting point.

    Thanks!

  9. Andrew says:

    In addition to Taxmama’s excellent advice I would do this. File an extension, then later this summer, when the IRS computers have everything updated, have a tax professional request a transcript of your account for income records. Just maybe a W2 was filed with the IRS and will show up.

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