How long should Form W-2s that are returned or canceled be retained?

The retention period for Form W-2s that are returned or canceled is indeed four years from April 15 following the tax year. This timeframe aligns with the IRS's guidelines for retaining records that support tax returns. By keeping these documents for four years, employers ensure they have sufficient documentation in the event of an audit or for any necessary follow-up on the information that was reported to the IRS.

This retention period is particularly important because it covers the timeframe in which the IRS can audit a tax return or assess additional taxes. The four-year retention allows employers to maintain proper records for their payroll reporting and to address any discrepancies that may arise related to employee income reporting and tax obligations.