IRS Form 4852 discussed by a Payroll CPA | Substitute for 2013 Form W-2

Payroll CPAs prepare IRS Form 4852 to substitute for Forms W-2, W-2c, and 1099-R when your boss does not provide one, or issues an incorrect one.

Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. What a name!

When to Use IRS Form 4852 as a substitute for your W-2

Sometimes it is impossible to get a Form W-2 from your employer. The company may have gone out of business for example. Or your ex-boss refuses to cooperate over some personal issue. If your efforts to secure an original Form W-2 and/or Form 1099 fail, you can call the IRS after February 14^th 2014. They’ll contact the employer or payer. But you may have to prepare Form 4852 as a substitute for the missing W-2, or 1099, as part of your overall Form 1040 2013 tax preparation.

There can also be mistakes on Form W-2, which your employer refuses to correct. Here you would also prepare Form 4852 as part of your Form 1040 tax preparation.

How to Prepare Form 4852

There must be a logical re-construction for the annual payroll figures presented on Form 4852. The most common re-construction scenario is using the last correct pay stub and extrapolating the rest of the year.

There are IRS penalties, of course, if you use Form 4852 to avoid paying taxes by manipulating your income. They’ve seen it all before.

What are Consequences of using Form 4852?

• The IRS penalizes employers or payers who do not follow their guidelines.
  • So you are providing evidence against your employer.
• If you file Form 4852 and then get more accurate information later (i.e. the W-2 arrives late), you may have to amend Form 1040 by filing Form 1040-X.
  • Any payroll CPA will say it’s always better to have an original W-2 or 1099.
• Using Form 4852 as a substitute for your W-2 is probably is an IRS red flag.

IRS Audit

The IRS has you on a “pay as you go” plan for your income tax through deductions from your paychecks or estimated tax payments. You must prove they owe you a refund. Forms W-2 and 1099 are vital “revenue matching” documents for the IRS. It stands to reason they will take an interest in any return that circumvents providing an original copy. So, the entire Form 1040 should be accurate when presented using Form 4852. And documented well enough to pass an IRS audit.

Explanations on Form 4852

• You must present your calculations for the figures on Form 4851.
• You must document your efforts to secure an original Form W-2 and/or Form 1099.
• Attaching corroborating documents to Form 4852 proactively is prudent.

Form 4852 may not need a CPA consult. But there are often other tax issues involved when Form 4852 is used as a substitute W-2

We hear of cases where Form 4852 is used to file Form 1040 before the original W-2 arrives, often for taxpayers that know they are due a refund and need it now. But, more likely, these cases involved a Rapid Anticipation Loan from a non-CPA tax preparer who later filed Form 1040 when the W-2 arrived. RALs were essentially halted by the IRS when they stopped providing tax preparer assurance that no tax liens existed on the taxpayer. This was secondary to President Obama recognizing that the fees and interest being charged were exorbitant. Part of the reason for Jackson Hewitt filing bankruptcy was the abrupt halt of large fees from RALs.

While we’re a CPA firm in Wilmington NC, we serve a broad geographical base through our virtual office. We practice in all States except HI. So, if you don’t already have a local CPA, or just want us to be your CPA, don’t let distance dissuade you. We offer excellent customer service through E-Mail, phone calls, fax, scans, Skype, DropBox, Google Drive etc. The CPA credential has now been essentially nationalized. And NC is in the highest tier of State CPA reciprocity because of the rigorous entrance and continuing education requirements.

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