Payroll Tax Record-Keeping: IRS Requirements
Posted on Wed, Jun 15, 2011
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.