What's Worth Keeping
Deciding which payroll records to retain and which ones to toss can be a challenge. Generally, the IRS requires payroll records to be retained for four years, but there are exceptions.
Taxes. You should generally retain any records that relate to federal income, Social Security, and Medicare taxes withheld and paid for at least four years after the due date of the employee’s personal income-tax return (usually April 15) for the year the payment was made.
Fringe benefits. If you offer health insurance or various other fringe benefit plans, you should keep the records necessary to establish that the plan meets the requirements for excluding the benefit amounts from your employees’ incomes. Assume the general four-year minimum applies unless there is a six-year retention period under federal pension law (ERISA).
Federal unemployment taxes. The four-year rule applies to records related to employee compensation and unemployment contributions. The latter period is tracked from the filing deadline for Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, or the date the FUTA tax was paid, whichever is later.
|Next Article||March 2017 Newsletter||Previous Article|