As an employer, you are responsible for sending W-2 tax statements to each employee by Jan. 31. Keeping your W-2 copies on file for several years protects against claims that you failed to send them on time and serves as a defense at an audit.
The Internal Revenue Service can audit the tax return of a small business for up to three years after filing, according to legal website Nolo. The IRS encourages business owners to retain all tax documents, including W-2s, for at least four years after filing. Nolo offers an even more conservative suggestion of holding records for at least six years after filing.
Reasons to Hold
In addition to using W-2 statements as documentation in an audit, you want to hold them in case employees claim they didn't receive a copy. Employees are directed to contact you if they don't receive a W-2 within two weeks of the Jan. 31 deadline. At that point, you may need to send another copy. You also need to keep copies of your business tax filings, including returns for which you reported employee income, for at least six years.
- ITkach/iStock/Getty Images