using html5 for file upload with ajax and jquery

So i am trying to upload an image along with form data to server. I'm using FileReader API to convert image to data and upload to server. I'm following the code similar to HTML5 uploader using AJAX Jquery.

The data is converted in jquery, but nothing is being sent to server and there is no error generated.

$('#formupload').on('submit', function(e){
    e.preventDefault();
    var hasError = false;
    var file = document.getElementById('file').files[0];
    var reader = new FileReader();
    reader.readAsDataURL(file);
    reader.onload = shipOff;

    function shipOff(event) {
        result = new Image(); 
        result.src = event.target.result;
        var fileName = document.getElementById('file').files[0].name; 
        $.post('test.php', { data: result, name: fileName });
    }

PHP Code

<?php
$data = $_POST['data'];
$fileName = $_POST['name'];
echo $fileName;
$fp = fopen('/uploads/'.$fileName,'w'); //Prepends timestamp to prevent overwriting
fwrite($fp, $data);
fclose($fp);
$returnData = array( "serverFile" => $fileName );
echo json_encode($returnData);
?>

Is the problem due to large image file or FileReader API?

I'm not sure if file upload works with filereaders, but there is a different way to make it work:

var formData = new FormData($(".file_upload_form")[0]);
$.ajax({
    url: "upload_file.php", // server script to process data (POST !!!)
    type: 'POST',
    xhr: function() { // custom xhr
        myXhr = $.ajaxSettings.xhr();
        if (myXhr.upload) { // check if upload property exists
            // for handling the progress of the upload
            myXhr.upload.addEventListener('progress', progressHandlingFunction, false); 
        }
        return myXhr;
    },
    success: function(result) {
        console.log($.ajaxSettings.xhr().upload);
        alert(result);
    },
    // Form data
    data: formData,
    //Options to tell JQuery not to process data or worry about content-type
    cache: false,
    contentType: "application/octet-stream", // Helps recognize data as bytes
    processData: false
});

function progressHandlingFunction(e) {
    if (e.lengthComputable) {
        $("#progress").text(e.loaded + " / " + e.total);
    }
}

This way you send the data to the PHP file and you can use $_FILES to process it. Unfortunately, this does not work in IE as far as I know. There might be plugins available that make this possible in IE, but I don't know any of them.