Tuesday, December 26, 2006
Domestic Employee Expenses: Document Retention
Household employers are required to retain some financial and tax documentation for preparation and justification of the annual Form 1040 Schedule H, "Household Employment Taxes."
HomeWork Solutions recommends that you organize and retain the following documentation on an annual basis:
1. Copies of cancelled checks to document the net amounts paid to your employee. If you pay via bank transfer, retain copies of the appropriate bank statements.
2. Calculation of the employees pay period wage and appropriate withholdings. HomeWork Solutions' clients will find this on their Customer Record. This documents the employee's gross wages.
3. Copies of all state unemployment tax returns.
4. Copies of all payments to the state unemployment taxing authority. The state payments are later transferred to the Form 1040 Schedule H.
In general, the IRS advises household employers to "Keep all employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out. "
More advice from the IRS
HomeWork Solutions recommends that you organize and retain the following documentation on an annual basis:
1. Copies of cancelled checks to document the net amounts paid to your employee. If you pay via bank transfer, retain copies of the appropriate bank statements.
2. Calculation of the employees pay period wage and appropriate withholdings. HomeWork Solutions' clients will find this on their Customer Record. This documents the employee's gross wages.
3. Copies of all state unemployment tax returns.
4. Copies of all payments to the state unemployment taxing authority. The state payments are later transferred to the Form 1040 Schedule H.
In general, the IRS advises household employers to "Keep all employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out. "
More advice from the IRS
