Question: What Employment Tax Records Must I Keep?
The IRS requires that you keep detailed records of employment taxes withheld or deducted from each employee, for no less than four years. Specifically, the IRS says you must keep these records "for at least four years after filing the 4th quarter for the year." Of course, the records must be available for IRS review.
Answer:
Employment Tax Records You Must Keep
- Your employer identification number (EIN)
- Amounts and dates of all wage, annuity, and pension payments
- Amounts of tips reported
- The fair market value of in-kind wages paid. These would be items you give an employee instead of paying cash.
- Names, addresses, social security numbers, and occupations of employees and recipients
- Any employee copies of Form W-2 that were returned to you as undeliverable
- Dates of employment
- Periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments you or third-party payers made to them
- Copies of employees' and recipients' income tax withholding allowance certificates (Forms W-4, W-4P, W-4S, and W-4V)
- Dates and amounts of tax deposits you made (using tax deposit coupon on Form 8109 before 1/1/2011, or using EFTPS before and after 1/1/2011)
- Copies of returns filed (Payroll tax returns, such as Form 941)
- Records of allocated tips
- Records of fringe benefits provided, including substantiation.
Before you hire your first employee, spend some time deciding how you will store these records. This step-by-step article for setting up a payroll record keeping system will guide you through the process.
