Spring is finally here! Although the winter chill has stuck around for a few extra days, it’s time to start your annual (tax) spring cleaning. Did you know that you are required by the IRS to maintain payroll records for each of your employees and have them readily available for tax matters? Before you begin, save this complete payroll checklist.
You Need This Payroll Checklist
It is a requirement for employers to keep income, social security, and Medicare tax records for a minimum of four years after the original due date of their employees’ income tax return.
The following information must be kept for the year in which payments were made:
- Employee Information:
- Social Security Number
- EIN (employer identification number).
- Compensation Details:
- Pay period of each compensation
- Taxes withheld, tips, and the [fair market] value of non-cash payments.
- And also, the amount of compensation that will require withholdings for federal income, social security, and Medicare taxes, along with the corresponding amount withheld for each tax.
- Employee Payroll Information:
- Employment beginning and end dates
- Tips received
- Wage or salary information
- Adjustments or tax settlements
- Other Important Employee Documents:
- Form W-2
- Form W-4
- Health and Benefit Information
- Copies of the Following [filed] Returns:
- Form 941 (along with applicable Schedules B, D, and/or R)
- Forms 943, 944, 945, 941-X
- Form W-3
- Copy A of Form W-2 and any W-2 Form that was mailed to employees but returned as undeliverable.
The Key To Keeping Great Payroll Records is Organization
There’s a lot to keep up with, right? Getting more organized during spring cleaning will better your tax filing experiences. As you gather those important documents, don’t forget to include any records related to claims. This can include refunds, credits, or deductions withheld income. Keep these records for at least four years after the filing date.
As an employer, you must maintain documents that support your employees’ returns and statements concerning tips. You will need to keep this information on hand for at least three years.
FUTA Tax Requirements
Records regarding unemployment claims through the Federal Unemployment Tax Act (FUTA) must be kept for at least four years after the Form 940 due date to provide the following information:
- Amount of employee compensation paid during the calendar year.
- Compensation amount subject to FUTA tax.
- Information listed on Form 940 (with Schedule A and/or R, if applicable).
- State unemployment contributions
- The reasoning for differing amounts of total and taxed compensation, if applicable.
Complete Payroll Checklist
Protect yourself and your business from possible legal issues with this complete payroll checklist. Share this post and comment below with any questions you may have for our expert payroll specialists.
Have you e-filed your 1099s with the IRS?… If not the deadline for filing your 1099s is Monday, April 2nd! No need to panic…Yet. You can file for an automatic extension with our sister product, TaxBandits. But you must do so before April 2nd, or face intense IRS penalties.