Updated: Jan 12, 2019
If you own a business and have employees do you know how long and what records you are required to keep for tax purposes? Below are listed all the major documents you need to retain when it comes to employee tax record keeping.
How Long You Need To Keep Employee Tax Records
According to IRS, all records need to be kept for a minimum of four years. The statute of limitations for IRS audit is 3 years from the date the tax return was filed, but there are instances where this can be extended.
What Records You Need To Keep
For tax purposes IRS lists on their website exactly what you need to keep on file.
Employee Identification Numbers: You must have on record the identification number of all employees. Other Identification Information: The names, addresses and occupations of all your employees need to be kept on file. All Wages Paid: The total amount and dates for all wages paid out to your employees. Amount Of Tips: If your employees are earning tips, you must additionally keep on file the amount of tips paid out to each individual. Absence Records: You must keep on file any time periods where you had an employee that was out of work due to an illness or injury. Benefits Paid: On file you will need to have records of any benefits paid out to employees including fringe benefits. Employment Dates: You must keep on file the dates that individuals were employed. W-4 Forms: You need to have each employee fill out a W-4 tax withholding form before they begin work for you. W-2 and 1099 Forms: You will need to keep a copy of all W-2 and 1099 forms that you issue. Returned as undeliverable W-2's and 1099's must be kept on file. Federal and State Payroll Tax Information: Accurate records of all payroll tax paid to both the federal and the state must be kept on file. You will also need to keep copies of IRS payroll forms 940 and 941.
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