Recordkeeping Rules For Federal Income Tax Withholding

All employers that withhold federal income tax (FIT) from their employees' wages must retain records of all remuneration paid to (including tips reported by) such employees.

These records must include:

• The name, address, and social security number of each employee
• The total amount and date of each payment of remuneration (including amounts withheld as tax or for any other reason) and the period of services covered by the payment
• The amount of each remuneration payment subject to federal income tax withholding (FITW)
• The amount of tax collected with respect to such payment, and if collected at a time other than the time such payment was made, the date collected
• The reason why there is a difference if the total amount of the payment and the amount subject to tax are not the same
• Copies of any statements furnished by an employee indicating that the worker expects to satisfy his or her income tax obligations under the laws of the Virgin Islands
• Copies of statements furnished by nonresident aliens that relate to their citizenship
• Copies of statements furnished by employees that relate to their residence or physical presence in a foreign country
• Copies of statements furnished by employees who are U.S. citizens residing in Puerto Rico
• The fair market value and date of noncash payments made to employees for services performed as retail commission salesmen with respect to which no FITW tax was withheld
• In the case of employers making payments under an accident or health plan, the beginning and ending dates of each period of absence from work for which such payment was made, and sufficient information to establish the amount and weekly rate of each such payment
• The withholding allowance certificates (Form W-4) filed with the employer by the employee
• Any agreement between the employer and an employee that provides for additional withholding
• The dates in each calendar quarter on which an employee performed services that were not in the course of the employer's trade or business and the amount of cash payments made for such services, to the extent such information is needed for determining tax liability
• Copies of tip-reporting statements furnished by employees, unless the information contained in such statements is recorded on another document retained by the employer
• Any request made by an employee to have the worker's withholding computed on the basis of cumulative wages, as well as any notice that revokes such a request
• For these purposes, "remuneration" includes all payments made in cash or in a medium other than cash. However, remuneration does not include noncash payments for services not in the course of the employer's trade or business. It also does not include noncash tips received by an employer, or cash tips that total less than $20.00 per month

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