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Payroll Tax Record-Keeping: IRS Requirements

filing payroll recordsDo 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.  Online payroll options are available for keeping payroll tax record reports online.

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.

Updated article from original publish date 6/01/2011

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