Where should the contractor keep the Form W-2 copy for each employee?

Where should the contractor keep the Form W-2 copy for each employee?

• A. The employee's personal records
• B. The contractor's office
• C. The payroll service
• D. The company's CPA file

Answer: (B)

The main idea is that employers must keep payroll records, including copies of Form W-2, as part of their official records. Keeping the W-2 copies in the contractor’s office (the employer’s payroll files) ensures you have the copies on hand for audits, reference, and verifying wages and withholdings reported to the SSA. The employee will receive their own copies for tax filing, but those belong to the employee, not the employer’s retained records. If you use a payroll service, they can generate and deliver the W-2s, but you still maintain a record copy in your office as part of your payroll documentation. Storing copies in the employee’s personal files or in the CPA’s file doesn’t satisfy the employer recordkeeping requirement.

The main idea is that employers must keep payroll records, including copies of Form W-2, as part of their official records. Keeping the W-2 copies in the contractor’s office (the employer’s payroll files) ensures you have the copies on hand for audits, reference, and verifying wages and withholdings reported to the SSA. The employee will receive their own copies for tax filing, but those belong to the employee, not the employer’s retained records. If you use a payroll service, they can generate and deliver the W-2s, but you still maintain a record copy in your office as part of your payroll documentation. Storing copies in the employee’s personal files or in the CPA’s file doesn’t satisfy the employer recordkeeping requirement.