Florida Building Contractor Business/Finance Practice Exam

What should contractors do with their IRS Form W-2?

1. Submit it to the bank

2. File a copy in the contractor's office

3. Send it directly to the IRS

4. Keep it with project records

The correct answer is: File a copy in the contractor's office

The appropriate action for contractors regarding their IRS Form W-2 is to file a copy in the contractor's office. This is important for several reasons. First, the W-2 form serves as an official record of the wages paid to employees and the taxes withheld throughout the year. Keeping a copy on file ensures that the contractor has accurate documentation for payroll records, which may be necessary for audits, tax assessments, or financial analysis. Additionally, maintaining copies of W-2 forms can aid in future business planning and financial forecasting, as contractors can analyze payroll trends over time. It also establishes a clear historical record in case of any discrepancies that may arise with employee taxes or governmental inquiries. While it may be necessary to send W-2 forms to the IRS and provide them to employees, the primary responsibility for the contractor is to maintain an organized and accessible record in their office for ongoing and future reference.