Payroll Tax Record-Keeping: IRS Requirements
Do you know what payroll records to keep and for how long? The IRS does. Here are some short answers to your payroll record-keeping questions:
What method should I use to keep records?
In general, according to the IRS, choose any record-keeping system that suits your business, as long as the method clearly shows your income and expenses. Keep all records, including payroll tax records, in an orderly fashion and in a safe place. The IRS suggests organizing records by year and type of income or expense.
How long should I keep payroll and employment tax records?
Keep all employment-related records, including payroll tax records, for at least three years after the due date of the return or the date it was filed, whichever is later.
What records should I keep?
Keep the following payroll tax-related items:
- Forms 941 or 944
- Employee copies of forms W-2 and W-3
- Employee Forms W-4 and W-5
- Records of fringe benefits paid to employees, and how you determined their value
- Names, addresses, and Social Security numbers of all employees
- Dates or employment for each employee
- Special payments such as sick pay or lump sum leave payments
- Travel vouchers and other accounting for employee reimbursements
- Receipts, canceled checks, etc. for deposits made or tax paid with return
Vendor or nonemployee payments:
- Names, addresses, and taxpayer ID numbers of payees
- Dates of payment
- Forms W-9
- Payer copies of 1099-MISC and other information returns
- Forms 945
- Description and purpose of payments made
- Notices regarding backup withholding
Visit the IRS website for additional information on payroll and employment record-keeping.