Employers need to follow W2 record retention guidelines to remain in good standing with the IRS. With tax season around the corner, you may be looking for a reminder of the retention guidelines for your tax forms. In the event that the IRS requests old tax records or you need to produce them for your employees, you will want a system in place to neatly house the forms. You may also be interested in a software solution for storing and organizing all the files you have to store, and AMS has a quality tax software ideal for form storage.
Why Do Employers Retain W2 Forms?
For each tax season, employers file a W2 tax form for each employee on their payroll. Employers file the original form with the IRS and generate two copies of the form, one of which goes to the employee and one which stays in the employer’s files. Employers can file the W2 electronically. In these cases, they save a digital copy of the form for their records. An employee may still request a physical copy of their W2, so employers need to be able to generate both an electronic and physical version of the form.
Per IRS W2 record retention guidelines, employers need to retain tax records for at least 4 years after the last filing for a quarter. Within the appropriate period of limitations, the IRS may need to assess additional taxes, or you or your employees may need to amend the tax return and request a refund or tax credit. These are the two main reasons why employers need to retain W2s. The IRS or employees may request these at any time within the period of limitations, and you need to be able to produce the forms.
What Information Do Employers Need to Retain?
Employers need to retain all an employee’s information and tax forms. Appropriate information includes an employee’s wages, contact information and social security number, and sick pay. In addition to this information, employers should keep copies of all income reporting tax forms, mainly the W2. Sometimes, W2 forms can return to you as undeliverable. Employers should keep any forms like these in their records as well.
How AMS Software Helps with W2 Record Retention Guidelines
You may feel overwhelmed with the prospects of following the W2 record retention guidelines if you do not have a storage system in place. You should consider AMS W2/1099 tax software to establish a filing and storage solution to satisfy record retention guidelines.
The W2/1099 base software package can create encrypted files to protect the sensitive identifying information like SSNs throughout the retention period. Additionally, you can establish individual employee files, making it easy for you to produce any files the IRS or employee may request. You can customize your software to add on other software features, like AMS E-File software, which enables you to electronically file W2 form to the IRS. Need additional support? Check out our accounting and payroll software. Now is a great time to take stock in your tax form system and invest in W2 to streamline your filing and storage setup.